China is gradually deepening the reform of the mergers and acquisitions market, encouraging listed companies to implement strategic investments to promote the high-quality development of the real economy. Amidst the wave of diversified investments, excess goodwill that deviates strategic investment significance as well as exhibits arbitrage nature, has made the “real-virtual” allocation relationship of enterprises uncertain. This paper selects A-share listed companies from 2009 to 2023 as the sample, examining the impact of excess goodwill on corporate financial asset allocation from the perspectives of strategic and non-strategic investments. The study finds that excess goodwill suppresses financial asset allocation, indicating a resource substitution relationship. Mechanism testing reveals that excess goodwill leads to the encroachment of cash resources, the intensification of debt constraints, and an increase in the governance effect of non-controlling major shareholders, which are the main reasons for the substitution relationship. The weakening of this substitution relationship is primarily due to short-selling transactions, the motivation of insiders to reduce holdings, and the decline in the binding force of commercial credit financing. Further study finds that, in terms of the stability of the substitution relationship, although the accounting standard reform in 2014 increased the predictability of the relationship between excess goodwill and financial asset allocation, the substitution effect is short-lived. In terms of economic consequences, excess goodwill causes damage to the operational capabilities of the real economy later than financial assets, and it reduces long-term equity investments with weak control and arbitrage nature. The findings enrich the theoretical exploration of corporate internal resource allocation, offering new perspectives on the optimization of asset allocation and financialization governance in corporate mergers and acquisitions. On the one hand, enterprises should acquire high-quality goodwill assets, focus on developing core businesses, and reduce reliance on speculative financial assets to stimulate the growth of the real economy; on the other hand, the government should take effective measures to enhance the corporate governance influence of creditors and non-controlling shareholders, and strengthen the predictive function of accounting standards and other institutional arrangements for asset value assessment, so as to promote enterprises to move “from virtual to real”.