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Retail shareholder activism and investment efficiency

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  • Zhao, Yang

Abstract

This study investigates the impact of retail shareholder activism on firm level investment efficiency. I find the online activism significantly improve firms' investment efficiency, and this effect is primarily driven by the mitigation of under-investment problem. The results are valid to a series of robust tests. Mechanism analysis indicates that retail shareholder activism mainly plays its role by disciplining hedonic managers and reducing information asymmetry. Finally, I find the impact is heterogeneous according to the characteristics of the activity and firm's responses. Collectively, the findings help to understand the governance effect of retail shareholder activism in weak investor protection countries.

Suggested Citation

  • Zhao, Yang, 2024. "Retail shareholder activism and investment efficiency," International Review of Financial Analysis, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finana:v:93:y:2024:i:c:s1057521924000802
    DOI: 10.1016/j.irfa.2024.103148
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