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Institutional Investor Network Embedding and Firms’ Total Factor Productivity

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  • Xiaofang Chen
  • Qin Li
  • Wei Cui
  • Yu Hu

Abstract

The improvement of total factor productivity (TFP) can improve the production efficiency of enterprises and ultimately promote high-quality economic development. This paper takes Chinese A-share listed companies from 2007 to 2020 to examine the impact of institutional investor network embedding on Firms’ TFP. The study finds that institutional investor network embedding can promote the growth of Firms’ TFP. Institutional investor network embedding improves Firms’ TFP by improving information transparency and firms’ innovation level, alleviating agency problems, and playing an active role in supervision and governance. The positive impact of institutional investor network embedding on TFP is more significant among firms with low audit quality and corporate governance level. This conclusion holds true using alternative variables, changing the construction standard of institutional investor network, and using propensity score matching and the Heckman two-stage methods. This paper enriches the research on the influencing factors of Firms’ TFP and the economic consequences of institutional investor networks.

Suggested Citation

  • Xiaofang Chen & Qin Li & Wei Cui & Yu Hu, 2023. "Institutional Investor Network Embedding and Firms’ Total Factor Productivity," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(6), pages 1896-1918, May.
    • Handle: RePEc:mes:emfitr:v:59:y:2023:i:6:p:1896-1918
    DOI: 10.1080/1540496X.2022.2156282
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