Investors' Corporate Site Visits And Management Opportunistic Behaviors

Since the eighteen Party Congress,general secretary Xi Jinping has clearly pointed out the importance of protecting investors' legitimate rights and interests in the instructions for the reform and development of the capital market.The new securities law has carried out institutional innovation,added a special chapter on "investor protection",and emphasized the importance of investors' rights and interests.Local governments,stock exchanges,securities companies,financial platforms and other organizations take this opportunity to actively respond to the requirements of the state and hold a series of activities to organize investors to enter listed companies for research.As a close and in-depth way to obtain firms' information,investors' site visits provide an information channel for investors to obtain firms' information,which is considered to be an effective way to practice the national requirements.The purpose and significance of investors' site visits is to shorten the distance between listed companies and investors,enhance mutual interaction,safeguard investors' rights to know as shareholders,and enhance investors' enthusiasm to participate in corporate governance.In the process of site visits,investors can obtain the hidden information of firms.Investors can obtain the real business activity information of firms by visiting and investigating the production and operation workshop,office environment and other real sites of firms,and can obtain additional information by communicating and communicating with the management.At the same time,investors can also act as information media to transmit the information of site visits to the market,so that more investors can obtain the firm's information and alleviate the information asymmetry between companies and investors.Specifically,through the analysis of the tone,intonation and body language of the management,combined with the information already mastered,investors and the management can build the substantive information of the companies and use it for investment decision-making,so as to make the firms' stock price more informative.Based on the specific conditions and the above characteristics of investors' site visits,it is of significance and worth exploring whether investors can play a supervisory role on firms'behavior while obtaining information.On the one hand,investors can be encouraged to actively participate in site visits activities,which is conducive to the promotion and development of the state's site visits activities for investors,and on the other hand,to practice the requirements of the state,lay a good foundation and contribute to the effective implementation of investor protection policies.How to verify the governance role of investors' site visits?Financial fraud of listed companies is a common manifestation damaging the rights and interests of investors,and has always been a key issue of concern.The essence of financial fraud of listed companies is the result of management opportunistic behavior.Therefore,from the perspective of management opportunistic behavior,this paper explores the supervision role of investors'site visits on management opportunistic behavior,so as to verify whether investors' site visits,as a channel to obtain information,can play a governance effect.The opportunistic behavior of the management is the behavior that the management encroaches on the wealth of shareholders and damages the interests of investors by concealment and deception in the process of companies' operations in order to seek private interests.The management can seek private interests by influencing resource allocation in daily business decisions;Fuzzy accounting information can be adjusted by book or actual business activities to achieve private purposes,such as to obtain monetary compensation;They can also pursue non monetary benefits in other ways.The forms of opportunistic behavior of management are multifaceted and multi-angle.Therefore,exploring the supervision role of investors' site visits on the opportunistic behavior of management is conducive to systematically explore the governance effect of investors' site visits from multiple angles and enhance the cognition and understanding of investors' site visits activities.Under the overall requirements of investors' rights and interests' protection and the requirement of firms' information quality improvement,this topic has certain research necessity and significance.Based on the above reasons,this paper systematically combs the domestic and foreign literature and relevant theoretical basis,through the combination of theoretical analysis and empirical test,and takes the site visits data of investors of A-share listed companies in Shenzhen Stock Exchange as a sample to empirically test the impact of investors' site visits on the opportunistic behavior of management.We specifically select three research perspectives namely cost stickiness,earnings management and management perks,which derives from daily business decisions of management,the opportunistic behavior of accounting information disclosure and the pursuit of additional private income.In order to better highlight the agency view of management perks,we explore from the perspectives of management excess perks and the stickiness of management perks.In the specific research,we use theoretical analysis and empirical methods to test the impact of investors' site visits on the three research perspectives,and in the further analysis,it explores how the internal and external governance mechanisms and heterogeneity affect the governance effect of investors' site visits.In addition,different research perspectives are also analyzed,such as the test of influence path.Specifically,we first comb the literature of the influencing factors of investors' site visit,the relationship among analyst forecasts,capital markets and governance effects,as well as domestic and foreign literature related to management opportunism and external governance mechanisms;Secondly,based on the information asymmetry theory,principal-agent theory and signal theory,we use normative research methods such as logical deduction to analyze the impact mechanism of investors' site visit on earnings management,cost stickiness and management perks,including the excess management perks and stickiness of management perk,and put forward research hypotheses.Finally,the empirical test method is used to test the research hypothesis proposed on the basis of theoretical analysis.The empirical studies found that:(1)Investors' site visit can inhibit corporate cost stickiness,which is specifically reflected in the higher the degree of investors' site visit,that is,the more times of investors'site visit,the more institutions and people participated in investors' site visit and the deeper the investors' site visit,the stronger the inhibition of cost stickiness.Based on the question and answer content of investors and management,the text analysis of the content of management's answers to investors' questions shows that when investors pay more attention to cost stickiness in the process of site visits,the governance effect of investors can be brought into play,which helps to curb cost stickiness.Companies' information transparency and the effectiveness of internal control operation are the specific impact path of investors' site visits curbing cost stickiness.Further analysis shows that investors' site visits can play a governance role in the corporate cost stickiness under the condition of poor information environment;the governance effect of investors' site visit on cost stickiness is mainly reflected in private firms,and the inhibition effect on the cost of material resources is more advanced.Investors representing research institutions have a more significant inhibitory effect on cost stickiness,after distinguishing the classification of investors representing research institutions,it is found that institutional investors have the most effective supervision effect on cost stickiness.(2)Investors' site visit can inhibit both accrued earnings management and real activity earnings management,which is specifically reflected in the higher the degree of investors site visit,that is,the more times of investors' site visit,the more institutions and people participated in investors' site visit and the deeper the investors' site visit,the higher the degree of inhibition on earnings management.Based on the text of question and answer between management and investors,the text analysis of the content of management's answer to investors shows that investors' attention to earnings management can improve the governance role of investors'site visits on earnings management,which is mainly reflected in the suppression of accrued earnings management.Further analysis shows that,firstly,investors' site visit cannot identify positive accrued earnings management,but can identify negative accrued earnings management;while investors' site visit can identify positive real activity earnings management,but cannot identify negative real activity earnings management.Secondly,we examine how firms' internal and external governance mechanisms affect the governance role of investors' site visit.It is found that management incentive will promote the the supervision of investors' site visit real activity earnings management.Auditing and investors' site visit are mutually alternative management.Auditing inhibits the supervision of investors' site visit on earnings management.Thirdly,this paper examines the governance impact of investors' heterogeneity in site visits.The study finds that compared with individual investors,investors representing research institutions have a governance effect on earnings management,after distinguishing investors representing research institutions,it is found that institutional investors have a supervisory role in both types of earnings managements,and other types of investors can supervise the earnings management of real activities,and the supervision is more effective than institutional investors.(3)Investors' site visit can inhibit the management excess perks,which is specifically reflected in the higher the degree of investors' site visit,that is,the more times investors'site visit,the more institutions and people participated in investors' site visit and the deeper the investors' the more institutions and people participated in investors' site visit,the stronger the inhibition on the management excess perks.Based on the text of question and answer between management and investors,the text analysis of the content of management's answer to investors shows that investors' attention to excess perks can not inhibit the management excess perks.We further explore the impact path,but fails to fully confirm that firms' information transparency is the path that affects the supervision of management excess perks.Further research and analysis,it is found that ownership concentration can promote the governance effect of investors' site visit on excess perks,while the governance effect of marketization index and investors' site visit is a substitute relationship.Management incentives help to promote the inhibition of investors' site visits on the excess perks of management.The governance effect of investors' site visit on management excess perks is more effective in state-owned companies.(4)Investors' site visit can inhibit the stickiness of management perks.Specifically,the higher the degree of investors' site visit,that is,the more times investors' site visit,the more institutions and people participated in investors' site visit and the deeper the investors'site visit,the stronger the inhibition of the stickiness of management perks.Based on the question-and-answer content between investors and management,the text analysis of the content of management's answer to investors shows that investors' attention to management's perks can not inhibit stickiness of management perks.It is further found that firms' information transparency is the impact path of investors' site visits on the stickiness of management perks.In the further analysis,it is found that the inhibition effect of investors' site visit on stickiness of management perks is more significant in the environment with high independence of the board of directors and less tracking numbers of analysts,and the inhibition effect of the investors representing the research institutions on the stickiness of management perk is stronger.After distinguishing investors representing research institutions,it is found that institutional investors play the most effective supervisory role.Compared with the literature on corporate governance effects investigated by existing investors,the innovations of this paper may be reflected in the following aspects:(1)Our study helps to systematically sort out the governance role of investors' site visits,improve and deepen the cognition and understanding of the governance role of investors' site visits.Focusing on the principal-agent theory and from the perspective of management opportunistic behavior,this paper systematically explores the impact of investors' corporate site visits on management behaviors,specifically from the research path,the heterogeneity analysis of the relationship with other governance mechanisms,and from the research content of investors' corporate site visits,through multi angle,multi-faceted and multi-dimensional research,Through the research on investors' corporate site visits and management behaviors,the impact and cognition of investors' corporate site visits as a channel to obtain information are improved.(2)From the perspective of text,this paper verifies the impact of investors' corporate site visits on management opportunistic behaviors,and increases the persuasion of the impact of investors' coporate site visits on management behaviors.At the same time,this study found that investors' corporate site visits can inhibit the agency behaviors of management in perk consumption,that is,investors' corporate site visits also have an effective impact on the implicit management incentive for firms,which helps to deepen the understanding of the impact of investors' corporate site visits,and also provides new ideas for the governance of perk consumption,It provides new ideas for the management of opportunistic behavior.Although the research content of earnings management in this paper has been confirmed,based on the original research,this paper adds an empirical test to explore the governance effect of investors' site visits from the perspective of text,which not only serves as a supplement to the research on this topic,but also provides strong evidence for the governance effect of investors' site visits.This paper also adds the exploratory research on the direction identification of earnings management by investors' site visits,and the difference research on the governance role of investors' site visits under the influence of internal and external governance mechanisms and investors' heterogeneity.Especially in the analysis of investor heterogeneity,the research on this topic is richer and the research conclusion is more meaningful by manually collecting the site visits data on investors from institutions.Similarly,the topic of cost stickiness is also supported in the existing literature,however,based on the original research,this paper adds the perspective of text analysis to verify the governance effect of investors' site visits on cost stickiness,also this paper adds path test and heterogeneity analysis on the basis of the original research to make the research more complete.(3)The research of this paper also has some innovation in the setting of investors' site visit indicators.This paper constructs six indicators from three dimensions,namely,research frequency,research breadth and research depth,and synthesizes these six indicators into a new indicator through principal component analysis.A total of seven indicators are constructed to measure investors' field research.The existing literature only selects a single dimension or three-dimensional indicators to measure investors' site visit.On this basis,this paper adds a comprehensive index to make the measurement of investors'site visit more complete.By constructing seven investor site visit indicators for empirical test,this paper makes the research results more stable and improves the reliability of the empirical test of this problem.Based on the above reasons,this paper has some innovation and incremental contribution.