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Institutional investor horizons, ownership structure and investment efficiency in China

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  • Zhihao Wang
  • Kezhi Liao
  • Sisi Wang

Abstract

This paper investigates the effects of institutional investor horizons on investment efficiency in China. By analysing 26,831 firm‐year observations from Chinese listed companies, we find that long‐term (short‐term) institutional ownership is negatively (positively) associated with the level of inefficient investments. A battery of robustness tests indicates causality. Further analyses reveal that the rise in environmental uncertainty and information asymmetry are transmission channels for increased inefficient investments. Moreover, we find that the single controlling shareholder and state owner can curb the management myopia induced by short‐term institutional investors while they do not impede the monitoring effort of long‐term institutional investors.

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  • Zhihao Wang & Kezhi Liao & Sisi Wang, 2024. "Institutional investor horizons, ownership structure and investment efficiency in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 739-782, March.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:1:p:739-782
    DOI: 10.1111/acfi.13164
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