Gambling culture and corporate financialization: Evidence from China's welfare lottery sales

Our study sheds new light on the determinants of firms' financial investment behavior from the perspective of local gambling culture. Using data on Chinese non-financial listed firms from 2008 to 2019, we find that firms in regions with a stronger gambling culture hold more financial assets. Furthermore, our analysis reveals that managers' risk-taking and local investors' risk preference are two possible channels through which the gambling culture to influence firms' financialization decisions. In addition, we find that the impact of gambling culture on financialization is more substantial among non-state-owned enterprises, among firms located in provinces with high marketization, and when the economic policy uncertainty is larger.