Financial assets accounting arrangement is an important part of the implementation of financial instruments standards, which has significant economic consequences. The existing literature focuses on the impact of financial asset allocation on economic behaviors. Based on the phenomenon of financialization, this paper studied the effect of financial asset allocation on cash flow risk, taking the moderation of financial leverage and explored the mediation of inefficient capital allocation into consideration. Eliminating heteroscedasticity, addressing endogenous concerns with 2SLS method, and testing robustness with Bootstrap method, the results show that there is a U shaped relationship between financial assets allocation and cash flow risk; financial leverage can moderate the relationship and weaken it while shifting the inflection point to the right. After distinguishing the types of financial asset allocation, the study finds that the relationship between market financial products and cash flow risk is U shaped; entrusted loans and other emerging financial assets negatively affect cash flow risk; investment real estate and financial equity investment do not significantly affect cash flow risk. After considering the life cycle stage of the enterprises, the study finds that there is a U type relationship between the financial asset allocation and cash flow risk in the growth and recession period; financial asset allocation negatively affect cash flow risk in the maturity period. By group test on the nature of property right, it can be concluded that the relationship between financial asset allocation and cash flow risk and the moderation of financial leverage are more significant in non state owned enterprises. Finally, after the exploration of the transmission path, the paper finds that inefficient capital allocation plays a mediating role in the process of financial asset allocation affecting cash flow risk.