The Impact of Gambling Culture on Entity Financialization

Abstract

Culture is an important factor that affects the investment behavior of enterprises, while gambling culture to a certain extent reflects people’s risk-taking spirit or speculative preferences. Taking Chinese A-share listed companies from 2008 to 2020 as a sample, we ran industry and year effect regressions to test the impact of gambling culture on corporate financialization from the perspective of speculative culture. Gambling culture is measured by regional per capita lottery consumption. The results show that a gambling culture plays a significant role in promoting the share of financial assets held by local enterprises. Economically speaking, every CNY 1000 increase in per capita lottery sales will lead to a 3% increase in the share of financial assets held by local enterprises. It is verified that a gambling culture affects corporate financial asset investment by enhancing management’s overconfidence level. In addition, by subdividing financial assets, we find that a gambling culture mainly increases holdings of profit-driven financial assets. Heterogeneity tests show that economic policy uncertainty, corporate performance pressure, and attribution of corporate property rights play a moderating role in the relationship between gambling culture and corporate financial asset investment. The conclusions of this paper help enrich the study of the economic consequences of gambling culture for micro-enterprises and broaden the understanding of financialization from a cultural perspective.