Do non-controlling large shareholders affect corporate over-financialization?: A shareholder hybrid perspective

This study investigates the monitoring role of non-controlling large shareholders (NCLS) on firms' over-financialization. We compared over-financialized firms with NCLS with those without. Our first finding suggests that firms with NCLS have a lower extent of over-financialization. We also find that the hybridity between controlling shareholders and NCLS in a firm decreases over-financialization. Additional analyses show that NCLS monitor over-financialization by alleviating corporate myopia. Furthermore, our results reveal that over-financialization decreases with the relative strength of NCLS compared to controlling shareholders, NCLS' number, and NCLS' shareholdings. Our conclusions remain valid after accounting for endogeneity and employing measures of over-financialization.