Considering the characteristics of China’s relational society, this paper analyzes why listed companies are keen on financial asset allocation from the perspective of relationship network, an informal institution. No matter from what angle to explore the deep-seated reasons why firms are keen on financial asset allocation, it is difficult for us to bypass two questions: One is why the phenomenon of firm financialization is so common; the other is why the degree of firm financialization is deepening day by day. We will analyze the relationship between the relationship network and the above problems from the following aspects, which is also the logical starting point of this paper: From the perspective of breadth, financialization belongs to the category of investment decision-making, including individual financialization (financialization of a single firm), local financialization (financialization of multiple firms in the same region or industry), and systemic financialization (financialization of firms in all regions or industries), which follows a diffusion path from individual, local, to systemic; from the depth, there are three levels of financialization, namely, low financialization, high financialization, and excessive financialization, which follows a development path from low, high, to excessive.

This paper analyzes the contagion effect and economic consequences of firm financialization under the framework of board network. It is found that when embedded in the board network, the financialization of listed companies in China has a significant contagion effect. At the same time, the contagion effect is significantly heterogeneous due to the fact that the board network connects the registered place, industry and actual human type of the firm, and the economic policy uncertainty aggravates the contagion effect to a certain extent. Further research shows that the contagion effect of firm financialization embedded in the board network leads to the decline of industrial investment rate, while the improvement of corporate governance is difficult to effectively alleviate the inhibitory effect; at the same time, the contagion effect has an inverted U-shaped impact on firm value. The direct policy implication of this paper is that firms should treat the board network prudently, especially carefully learning and imitating the financial experience of connecting firms. At the same time, the regulatory authorities can start from the board network to solve the problem of “from real to virtual”.

The contribution of this paper is mainly reflected in the following aspects: On the one hand, the existing research mainly analyzes the influencing factors and economic consequences of firm financialization from the perspective of individual, but does not take into account the informal system. We try to analyze the interaction between firms in financialization from the perspective of relationship network, so as to enrich the existing theoretical research. On the other hand, this paper finds that the contagion effect of firm financialization caused by the board network has aggravated the decline of industrial investment rate, which provides new evidence for further evaluating the value of board network.