Proportion Of Institutional Investors Research Articles

Does corporate digital transformation affect investor trading behaviour? – A perspective based on investor divergence

ABSTRACT This paper takes A-share listed companies during 2010–2021 as the research object, and finds that the digital transformation (DT) of enterprises affects investors’ trading behaviours; more specifically, the digital transformation of enterprises increases investor divergence. This paper also finds that external governance factors mitigate the impact of digital transformation on investor divergence; specifically, analyst tracking mitigates the impact of digital transformation on investor divergence by alleviating information asymmetry. As more professional investors, institutional investors have stronger information mining and analysis capabilities, so the impact of digital transformation on investor divergence could also be mitigated with the increase in the proportion of institutional investors. The intermediary mechanism test suggests that corporate digital transformation triggers investor divergence by increasing surplus volatility. Further research finds that, firstly, different approaches to digital transformation have different impacts, with digital transformation through self-developed technology being more likely to trigger investor divergence. Secondly, different firm natures have different impacts, with the digital transformation of non-high-tech firms having relatively greater impacts on investor divergence. Finally, the digital transformation of non-state-owned enterprises has greater impact on investor analysis.

Manager myopia and green technology innovation

PurposeWith the growing concern of various sectors of society regarding environmental issues and the promotion of sustainable development, green technology innovation is generally considered to be conducive to the long-term development of enterprises. However, because of the existence of agency problems, managers may have shortsighted behaviors. Then how will managers' shortsighted behaviors affect enterprises' green technology innovation?Design/methodology/approachThis paper uses machine learning-based text analysis methods to construct a manager myopia index based on the data from A-share listed companies on the Shanghai and Shenzhen Stock Exchanges from 2015 to 2020. We examine the impact of manager myopia on green technology innovation in companies.FindingsOur study finds that manager myopia significantly inhibits green technology innovation in companies. However, when multiple large shareholders coexist and the proportion of institutional investors' holdings is high, it can alleviate the inhibitory effect of manager myopia on green innovation. Heterogeneity tests show that the impact of manager myopia on green technology innovation is relatively significant in non-state-owned and manufacturing companies, as well as in the electricity industry. Robustness tests demonstrate that our conclusions remain valid after using propensity score matching to eliminate endogeneity problems.Originality/valueFrom the perspective of corporate governance, this paper incorporates managers' shortsightedness, multiple large shareholders and institutional investors' shareholding ratios into the same logical framework, analyzes their internal mechanisms, helps improve corporate governance, enhances green innovation capabilities and has strong implications for the implementation of national innovation-driven development strategies and the achievement of “carbon peak” and “carbon neutrality” targets.

ESG Disclosure, Institutional Investor Preferences and Firm Value

Based on stakeholder theory and signal and reputation theory etc,this paper evaluates the quality level of ESG disclosure of listed companies using Wind ESG score, and introduces the variable of institutional investors' shareholding ratio, selects 2780 listed companies from 2018-2022 as samples, analyses whether institutional investors have ESG investment preferences, and investigates the value of the quality level of ESG disclosure on the value of listed companies' impact mechanism, and further heterogeneity analysis on this basis. The empirical results show that, firstly, improving the quality of ESG information disclosure by listed enterprises in China is conducive to significantly increasing their enterprise value; secondly, institutional investors have ESG investment preferences and attach more importance to the ability of listed enterprises to develop in the long term; thirdly, the proportion of institutional investor shareholding plays a partly intermediary role in the process of the impact of ESG information disclosure quality on the value of the enterprise, i.e., listed enterprises with high-quality ESG disclosure level can attract the attention of institutional investors to the enterprise value. Third, the proportion of institutional investors' shareholding plays a partial mediating role in the process of ESG disclosure quality level affecting enterprise value, i.e., listed firms with high-quality ESG information disclosure can attract institutional investors to increase their shareholding, thus enhancing their enterprise value. Fourthly, the extent to which the quality level of ESG disclosure affects the value of listed firms varies according to the attributes of the firms: there is a significant difference between large-scale and small-scale, highly marketised and low-marketised listed firms; and there is no difference shown between state-owned and non-state-owned, light-pollution and heavy-pollution listed firms, and all of the above conclusions are robust. Accordingly, this paper puts forward recommendations to strengthen the construction of the domestic ESG disclosure and governance system, encourage listed enterprises to practice the concept of ESG responsibility, and develop medium- and long-term institutional investors, aiming to promote listed enterprises to achieve sustainable development, and thus promote the construction of the domestic ESG disclosure system.

Digital Transformation of Enterprises and the Governance of Executive Corruption

This paper measures enterprise digital transformation by the method of text analysis and empirically tests the impact of enterprise digital transformation on the executives' corruption. We find that the higher degree of digital transformation of enterprises, the lower the probability of corporate executives' corruption. This conclusion is still valid under a series of robustness tests. The mechanism test shows that the impact of enterprise digital transformation on the governance of executives' corruption is mainly realized by reducing the degree of information asymmetry and alleviating the agency problem. Further research finds that both proportion of institutional investors and internal control can strengthen the reducing effect of digital transformation on the probability of corporate executives' corruption. The research conclusion of this paper reveals the governance effect of enterprise digital transformation on corporate executives' corruption, and provides effective experience for the central government and enterprise anti-corruption actions.

Economic Policy Uncertainty and Stock Price Crash Risk: Based on panel data models

We examine the relationship between economic policy uncertainty (EPU) and stock price crash risk based on the stock data of China A-share market from 2007-2019. Correlation analysis, univariate and multivariate test, robustness test and heterogeneity test are used to analyze the data. According to the results, economic policy uncertainty is negatively correlated with stock price crash risk. This correlation is valid since it passes the robustness test of replacing the main independent and the dependent variables. Further analysis reveals that this negative relationship is more obvious in certain situations. Specifically, it includes four cases: (1) the enterprise is not a state-owned enterprise; (2) the Big Four audit is not selected; (3) the proportion of institutional investors is low, and (4) the analyst coverage rate is low. These results shed light for an important influencing factor of stock price collapse and provides a reference value for the prevention and response of stock price collapse.

The effect of institutional ownership on listed companies’ tax avoidance strategies

ABSTRACT The percentage of institutional ownership in China has increased gradually. Does this characteristic of Chinese institutional investors affect their participation in corporate governance, which in turn, affects corporate tax avoidance activities? We take 1108 listed Chinese companies from 2009 to 2017 to study this issue. The paper uses average daily total market capitalization as an instrumental variable to test the endogeneity problems. We run a quantile regression (QR) at the median level as robustness testing to overcome the fat tail of financial data. Then, the shareholding ratio of majority shareholders is introduced to verify that ownership concentration is one of the mechanisms through which institutional shareholders influence corporate tax avoidance decisions. The findings are as follows: The proportion of institutional investors’ shareholdings is positively related to the degree of enterprise tax avoidance. The increase in institutional investors’ shareholdings is likely to promote corporate tax avoidance. When the level of ownership concentration is low, the increase in institutional ownership can play a greater role in promoting tax avoidance.

Can institutional investors restrain stock market manipulation?--Empirical evidence from an emerging market

This paper analyzes the relationship between the proportion of institutional investors’ shareholding and the probability of stock manipulation using 252 cases of manipulation disclosed in public administrative penalty decision of the China Securities Regulatory Commission (CSRC) from 2007 to 2019. The empirical results show that the higher the proportion of institutional investors’ shareholding, the lower the probability of market manipulation. Further analysis shows that the effect is mainly shown in non-shortable stocks. Moreover, controlling for the endogeneity using exogenous policy shocks, the effect of institutional investors on restraining market manipulation still exists. In the end, considering the fact that the cases of market manipulation detected by the CSRC are only a part of the real cases, this paper uses Bivariate Probit model with partial observability and finds that the higher the proportion of institutional investors’ shareholding, the lower the probability of stocks being manipulated and the higher probability of being detected after manipulation.

Research on the Influence of Economic Policy Uncertainty on Stock Market Heterogeneity Based on Investor Perspective

For the investors in the Chinese stock market, it is mainly divided into institutional investors and individual investors. It is well known that the number of individual investors, that is, the shareholding ratio, occupies the vast majority of the stock market, so changes in their investment behavior and sentiment will inevitably have a profound impact on the stock market. Although the proportion and size of institutional investors is smaller than that of individual investors, because of the concentration of funds and the concentration of investment behavior, the stock market will also play a non-negligible role. This paper will analyze from the perspective of investors in the stock market, whether the behavior of different investor entities has different degrees and different effects on stock market volatility. Through analysis, it is found that when the proportion of institutional investors increases, the volatility of corporate stocks can be effectively reduced. Volatility in corporate stocks rises when investor sentiment is high. When considering the shareholding ratio of institutional investors and investor sentiment, economic policy uncertainty has a greater impact on corporate stock volatility.

The Impact of Corporate Governance and Investor Confidence on Earning Management: Evidence from Thai-Listed Company

The aim of the research is to study impact of corporate governance and information of investor confidence on earning management of firms listed on the Stock Exchange of Thailand. Stratified random sampling technique was employed in order to obtain the required sample of 408 Thai-listed companies. The study have excluded financial companies because their capital structure and profit are different. The study uses annual data of companies in 2015. The results showed that the highest shareholders impact on earning management, the proportion of institutional investors influencing both the earning management and investor confidence, and companies with BIG4 have an influence on investors' confidence. However, board size and CEOs Duality did not find any influence on earning management and investor confidence.

Bank Governance, Risk and Bank Insolvency: Evidence from Tunisian Banks

The aim of this paper is twofold. Firstly, it investigates the effect of bank governance on bank risk measured by the standard deviation of the return on assets (SDROA). Secondly, it tests the relationship between bank governance mechanisms and bank insolvency proxied by the Zscore (ROA). To achieve this goal, we used a sample of 11 Tunisian banks observed during the period 2006-2015. These 11 banks are considered as the most dynamic banks in the Tunisian banking system. The econometric approach used in this study is based on panel data analysis especially fixed and random effect models. Empirical results indicate that the presence of Supervisory Committee and monitoring of risks (COR), the executive compensation (REMB) and the board size (BDSIZE) increases significantly Tunisian bank risk and insolvency. However, the presence of independent directors (INDD) and the proportion of institutional investors decrease bank risk and bank insolvency. With regard to the effect on macroeconomic condition, only inflation rate exerts a significant effect. However, this effect is negative when the dependent variable is SDROA and positive for Z-score. The effect of GDPG is not significant for both bank risk and bank stability.

Market Valuation Effect of Foreign Asset Divestitures in an Emerging Economy: Korean Evidence

ABSTRACTWe find evidence that foreign asset divestitures announced by Korean listed firms lead to a decrement in firm value. Interestingly the divestiture announcements by firms with a large proportion of institutional investors, who hold advanced professionalism in stock investments, contribute to an increment in firm value, but ones by firms with a large proportion of individual investors lead to a decrement in it. Unlike the case of firms in advanced countries, our distinctive finding that the divestiture announcements produce a decrement in firm value around the announcement day sheds new lights on market valuation effects of foreign asset divestitures of firms in other emerging economies.

Institutional investors, information asymmetry and stock market liquidity in France

Purpose – The purpose of this paper is to examine the effect of institutional investors’ ownership and type on information asymmetry and stock market liquidity in France. Design/methodology/approach – The sample includes 162 French-listed firms from 2007 to 2009. The methodology relies on linear regressions using the method of ordinary least square. Before examining the interaction between liquidity and institutional investors, the authors check for the existence of the endogeneity problem by applying the Durbin-Wu-Hausman test of Davidson and MacKinnon (1993). The results of the endogeneity test show that institutional investors’ ownership and stock liquidity are endogenous. A simultaneous equation model using the double least square method is then tested to address this problem. Findings – The findings show that the proportion of institutional investors has a positive and significant effect on stock-market liquidity, which confirms the signal theory and trading hypothesis. These investors perform high trading activity which favorably affects market liquidity. The results also show that pension funds improve stock liquidity. This result suggests that pension funds manage huge assets decreasing transaction costs and improving liquidity. They display a positive signal to the market about more transparency and a low level of informational asymmetry. Practical implications – These results highlight the institutional investors’ role in defining the level of liquidity on the French market. The findings also stress the relevance of developing institutional investors’ demand for the Paris market in order to better assess firm value, protect minority ownership and improve market liquidity. Originality/value – In the French institutional setting, institutional investors act as a control device since minority shareholder interests are less protected than in Anglo-American counterparts. This result highlights the significant role of institutional investors in corporate governance structures and on financial markets. Their presence is a guarantee for minority interest protection and for more liquid stocks.

The Self-Interest and Altruistic Actions of Institutional Investor: Korea Evidence

Using multiple regressions and large sample, this study finds evidence that firms with a high proportion of institutional investors tends toward influence managers to select efficient earnings management and restrain aggressive earnings management. This may result in firms health development and stock returns increase, which not only maintain institutional investors own interests, but also maintain the rights of the other small shareholders. This evidence is not consistent with any prior views of institutional investors role. This may shed a new light on this reach area and have realistic meaning and practice value.