Study on the Driving Forces, Implementation Process, and Effects of Financialization from the Perspective of Youngor's Corporate Life Cycle

Abstract

The effect of financialization on nonfinancial corporations changes depending on the corporation's life cycle stage. In the case of Yagor, the paper analyzes reasons, means, and implications of financialization at different life cycle stages. The research results in an identification of the fact that Yagor went through three separate phases of financialization-"reservoir", "investment substitution", and "strategic course correction". A moderate degree of financialization was helpful during the growth stage. However, excessive financialization took place during the maturity stage and diverted money from R&D activities, thereby increasing risks. The policy of definancialization, which involves reducing financialization on purpose, was applied during the decline stage. It is demonstrated in the study that the influence of financialization varies depending on the stage in the life cycle, and that success hinges on a resource allocation strategy based on prioritizing the core business while finance plays an enabling role. It is imperative for companies to adjust their strategies according to their life-cycle stage and for regulators to provide them with appropriate advice. The findings of this paper help understand how industrial firms can combine their industrial and financial activities, although additional case studies would be required.