Delisting regulation and corporate financialization: Evidence from China

We investigate the impact of the implementation of new delisting regulations in China in 2020 on corporate financialization, utilizing data of non-financial listed companies in Chinese A-share market from 2018 to 2022. We find a reduction in corporate financialization after the new delisting regulation, and the decline can be attributed partly to a more constrained free cash flow and reduced managerial myopia. The decrease in financialization is more pronounced among non-SOEs, companies with management shareholding, concentrated ownership structure, and less external attention. After the new delisting regulation, the operational performance of companies' core business is also improved, and more long-term assets are allocated, indicating a positive effect of the new delisting regulation on real economy.