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Institutional investors' corporate site visits and corporate innovation

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  • Jiang, Xuanyu
  • Yuan, Qingbo

Abstract

This study investigates whether and how institutional investors' site visits affect corporate innovation. Using all Chinese firms listed in the Shenzhen Stock Exchange from 2009 to 2013, we find that institutional investors' site visits significantly enhance corporate innovation and this effect is more pronounced for firms with a lower-quality information environment and poor corporate governance. We further find that the governance effect of site visits on innovation is consistent with career concerns rather than the quiet life hypothesis. We perform two stage-least square analysis to address possible endogeneity concerns and several robustness checks including using alternative measures of site visits and corporate innovation, alternative model specifications, and controlling for firm fixed effects. We also find that the effects of institutions' site visits are substitutes for the effects of institutional shareholding.

Suggested Citation

  • Jiang, Xuanyu & Yuan, Qingbo, 2018. "Institutional investors' corporate site visits and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 148-168.
    • Handle: RePEc:eee:corfin:v:48:y:2018:i:c:p:148-168
    DOI: 10.1016/j.jcorpfin.2017.09.019
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate site visits; Corporate innovation; Information environment; Career concern; Quiet life;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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