Institutional investors' site visits,information asymmetry,and investment efficiency |
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| Institution: | 1. School of Business, Zhengzhou University of Aeronautics, No.15, Wenyuan West Road, Zhengdong New District, Zhengzhou, Henan 450046, China;2. School of Business Administration, Henan Finance University, No. 22, Longzihu North Road, Zhengdong New District, Zhengzhou, Henan 450046, China;3. Guangzhou College of Commerce, Guangzhou, China;1. College of Finance, Nanjing Agricultural University, Nanjing 210095, China;2. School of Advanced Agricultural Sciences, Peking University, Beijing 100871, China;3. Business School, Hohai University, Nanjing 211100, China;1. School of Economics, Jiaxing University, Jiaxing 314001, China;2. China-ASEAN Institute of Financcial Cooperation, Guangxi University, Nanning, Guangxi, China;3. School of Economics, Guangxi University, Nanning, Guangxi, China;5. Shenzhen International Graduate School, Tsinghua University, Shenzhen, Guangdong, China;6. Guangxi University of Finance and Economics, Graduate School, Nanning, Guangxi, China;1. SKEMA Business School – Université Côte d''Azur, France;2. Rennes School of Business, Rennes, France;3. DCU Business School, Dublin City University, Dublin, Ireland;4. IESEG School of Management, UMR 9221 - LEM - Lille Économie Management, F-59000 Lille, France;5. Univ. Lille, UMR 9221 - LEM - Lille Économie Management, F-59000 Lille, France;6. CNRS, UMR 9221 - LEM - Lille Économie Management, F-59000 Lille, France;1. Audencia Business School, Nantes, France;2. ESSCA School of Management, 1 rue Joseph Lakanal, Angers, France |
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| Abstract: | Based on data from Shenzhen A-share listed companies from 2012 to 2017, this paper studies the relationship between institutional investors' site visits (SVs) and corporate investment efficiency and its intrinsic transmission mechanism. Institutional site visits (SVs) can effectively mitigate firms' underinvestment, but it has no significant inhibitory effect on overinvestment. The conclusion still holds after using the instrumental variables and alternative measurements of investment efficiency. Mechanism analysis finds that site visits can alleviate underinvestment by reducing information asymmetry. We further document that the impacts are more pronounced for brokerages, funds, and private equity firms, firms with higher levels of internal governance, and firms' regions with better marketization. Our study suggests that institutional SVs mainly contribute to mitigating underinvestment rather than inhibiting overinvestment. This study provides practical insights for regulating corporate investment decision-making and is of significant practical significance for promoting the healthy development of enterprises. |
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