Based on panel data of Chinese A-share listed companies of Shenzhen Stock Exchange from 2013 to 2021, this paper examines the impact of institutional investor’s research on corporate financialization from two competing perspectives: pressure effect and monitoring effect. The results show that institutional investor’s research has a positive impact on corporate financialization. After dividing the financial asset allocation structure, we find that institutional investor’s research can promote firms’ allocation of “reservoir” financial assets and discourage firms from allocating “investment alternative” financial assets, indicating that institutional investor’s research has a monitoring effect on firms’ financial asset allocation. Further study found that the monitoring effect of institutional investor’s research on financial asset allocation was more pronounced for firms with lower financing constraints and higher agency costs. The monitoring effect of institutional investor’s research on financial asset allocation helps to improve firms’ total factor productivity. The results provide a feasible basis for the authorities to improve investor relations management and improve the problem of “off the real to the virtual” by market means.