A Research On The Corporate Governance Effect Of Institutional Investors' Corporate Visits

The institutional investor has the professional advantage and ability for collecting,analyzing and processing information.The institutional investor is the curial part for capital market,and to be the important external force for constructing a sound corporate governance structure,which also play an important part for corporate governance.In recent years,the institutional investors' visits and investigations to the listed companies has received wide attention from domestic and abroad scholars.The institutional investors' corporate visits(IICV)is an important approach for investor to collect information of listed corporate.(Cheng et al.,2016,2017).Through investigation,institutional investors could have a deep understanding the information about the operating management situation and the future development planning of enterprise,and could also collect more value information for the better decision making(Kong Dongmin et al.,2015).Although,the current research has focused on the significance of IICV,the most of them just focused the impact of IICV on capital market,but it is seldom combined with corporate governance to investigate the external governance effect of IICV and its impact on the listed companies.Thus,could the IICV have the impact on corporate managers and their behaviors by decreasing the information asymmetry between investor and listed corporate?Could the IICV be an effective external governance mechanism to improve the corporate governance level?What impacts it would produce on corporate,if the IICV as one kind of external governance works.The thoughts and inspirations on these questions are the significant research topic in corporate governance area.It explored the function and the significance of IICV from a new point,namely,the function and effect of IICV on corporate governance.Base on the information asymmetry theory and the principal-agent theory,this article studied the external governance effect of IICV on listed companies.In particular,this article studied whether the IICV has the supervisory restraint on listed companies and whether the IICV could play a positive external governance effect to reduce enterprise earnings management level and to improve the corporate governance level.At the same time,it will further improve the investment efficiency of enterprises and promote enterprise innovation.In order to offer the more theoretical and empirical support for completing the current corporate governance theory and for constructing the corporate governance mechanism,this article attempted to combine with the practice of corporate governance in China to research the function of IICV on corporate governance and to examine the impact of this function on corporate investment efficiency and innovation output.This article reviewed the relevant literature about IICV and studied the external governance effect of IICV from several aspects.Then,the article discussed the impact of IICV on enterprise after the corporate governance improving.First,this article analyzed whether the IICV could play the external supervisory function to improve the corporate governance level.The results revealed that the IICV could play a supervisory restraint function on corporate executive behavior,and could decrease the corporate earnings management and could increase corporate earnings information quality.Second,this article examined whether the IICV has the contribution to increase the investment efficiency and innovation output of corporate after the corporate governance level improving.The empirical test results revealed that the IICV has the positive effect on promoting investment efficiency and innovation output of corporate.Finally,the corporate governance effect produced by IICV was affected by the institutional heterogeneity,the characteristic attribute of the listed companies,the internal and external governance environment and other factors.According to the above factors,this article did the heterogeneity analysis,which made the research to be more comprehensive.The empirical test demonstrated the brokerage and funds'research to listed firms have the larger effect on corporate.Moreover,the positive effect of IICV on corporate governance was more significant for non-state owned enterprises,the relative small size companies,the corporates with better internal governance and the corporates with better external governance environment.The article included six parts,which are introductory,theory analysis,three chapters of empirical analysis and conclusion.The main contents of each section are briefly described below.The first part was introductory.It contained the research background,significance of research,the literature review,the research content,the research methodology,the research framework,and the research innovation and deficiency.The second part introduced the theory foundation and institutional background of the corporate governance function of IICV.Through the overview of information asymmetry theory and principal agent theory,we combine IICV with corporate governance so as to highlight the governance effect of the IICV.We mainly analyzed the external function of IICV in corporate governance and offered the theory support for the effect of IICV on enterprise earnings management,investment efficiency,and innovation output.This part also depicted the institutional background and current situation of IICV in our country.The third part to the fifth part are the empirical analysis.The third part examined the impact of IICV on corporate earnings management and small profit.The empirical test results claimed that the IICV could significantly decrease corporate earnings management and the probability of reporting a small profit,which could improve the quality of corporate financial report.The results proved the IICV could relieve the principal agent problem and improve the corporate governance effectively,and it was an important external governance mechanism.The forth part examined the impact of IICV on enterprise investment efficiency.The supervisory governance function of IICV could relieve the inefficiency investment behavior of enterprise.The empirical test results revealed that the IICV had the function of external supervisory for corporate and could decrease the information symmetry between investor and enterprise which could constraint the company managers and increase the investment efficiency.The external supervisory function of IICV is more powerful to the relative small size companies,the companies with better internal governance environment,the companies in areas with higher marketization degree and better legal environment.The fifth part demonstrated the impact of IICV on enterprise innovation output from the corporate's long term development aspect.This part also demonstrated whether the IICV could affect enterprise innovation,improving the competitiveness of enterprises and promoting the long term development of company,after the governance level and investment efficiency improving.The empirical test proved the IICV could promote the innovation output,and the result was more significant in companies with better internal and external governance environment.These results represented that the healthy internal and external governance environment could promote the IICV to play the supervisory and governance function and constrain the manager's behavior.The three empirical analysis chapters analyzed the heterogeneity of IICV on several aspects.The test results claimed that the IICV as one kind of important external supervisory governance mechanism could improve the corporate governance level and increase the investment efficiency of company,and has the positive effect on innovation and long term development of company.The sixth part listed conclusions and policy suggestions.The contribution of this article is below.Firstly,this article demonstrated the external governance effect of IICV which could enrich the research literature about IICV area and also expand the research about the internal and external governance,investment efficiency and innovation of corporate.The study results enhanced the identification of the relationship between institution investor and listed companies,and the study results also offered the powerful empirical evidence for IICV and corporate governance,which are important to understand the function of IICV and the external mechanism of corporate governance.Secondly,through the empirical test of the data of SSE A-share listed companies,this article mainly test the impact of IICV on corporate earnings management.investment efficiency and innovation,which offered empirical evidence for the impact of IICV on corporate behavior and governance.Thirdly,in the empirical test,this article mainly adopted pooled regression,Fama-MacBeth regression,two-way fixed effects and sample regression methods.2SLS,LIML and GMM methods and panel instrument variables methods were adopted for reducing potential endogenous problem.Moreover,the examination of effect of IICV on earnings management used the Probit model and IV Probit model methods for robust test.The above empirical test could identify the external governance effect of IICV.Fourthly,this article studied the different impact of heterogeneity institution on corporate and the different governance effect in the research process.Specifically,from the perspective of heterogeneity,we discussed the effect of IICV on companies'earnings management,investment efficiency and innovation output.This article also enriched the relevant literature about external governance effect of IICV.Fifthly,in order to examine the effect of IICV in the case of different nature of property right and corporate size,this article did the heterogeneity analysis on corporate characteristics aspect.Sixthly,this article tested whether the governance function of IICV would be different with the different internal governance level of corporates.Seventhly,this article researched the impact of external governance environment difference on the governance function of IICV.Specially,this article studied the impact of IICV on companies' earnings management,investment efficiency and enterprise innovation output in different external environment.In brief,through the study of this article,we found that the IICV has the external supervisory function.The investigation could decrease the information asymmetry,constrain the manager's behavior,relieve the principal agent problem,improve the corporate governance level,further increase investment efficiency and the innovation output of companies.The above results proved the effectiveness of IICV external governance function and offered the empirical evidence for the impact of IICV on corporate behavior,and proved the significance and the function of IICV.