ABSTRACT This paper examines the impact of minority shareholder short-termism on investment inefficiency in China. Using a sample of listed companies between 2010 and 2020, we find that minority shareholder short-termism, as reflected on online investor interactive platforms, significantly increases inefficient investments. Our findings withstand a series of endogeneity and robustness tests. Further analyses reveal that increased trading activity and performance expectation pressure are key channels through which minority shareholder short-termism exacerbates inefficient investments. Additionally, the presence of long-term institutional investors and state ownership mitigates the negative effects of minority shareholder short-termism on investment efficiency. In terms of inefficient investment types, minority shareholder short-termism aggravates underinvestment rather than overinvestment.
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