Research On Institutional Investors’ Site Visit,Institutional Investors’ Shareholding Choice And Corporate Performance

As one of the main participants in the financial market,institutional investors have a larger investment scale than individual investors(retail investors),so their wrong investment decisions will bring more losses.Site visit,a more active way to obtain investment information,have emerged to help institutional investors improve their investment efficiency and seize investment opportunities.On the one hand,institutional investors’ site visit(hereinafter referred to as "institutional site visit")provides an effective channel to obtain the internal information of listed companies.Institutional investors have a deeper understanding of the actual situation of the visited company during the process of institutional site visit,which is helpful to adjust their shareholding timely.On the other hand,institutional investors can also monitor the behavior of management through institutional site visit,thus improving the management level and promoting the performance of the visited company.Taking the listed companies on the main board of Shenzhen Stock Exchange in China from 2014 to2018 as research subject,this paper discusses the impact of institutional site visit on institutional investors’ shareholding choice and performance of visited company.The main conclusions of this paper are as follows:(1)There is a significant positive correlation between the intensity of institutional site visit and shareholding choice of institutional investors.During the institutional site visit,different types of institutional investors show different shareholding choice.When the P/E ratio of the visited companies is lower than the industry average,the transactional institutional investors significantly increase the shareholding,while holding institutional investors do not significantly change the shareholding.When the P/E ratio of the visited companies is higher than the industry average,the holding institutional investors significantly reduce the shareholding,while transactional institutional investors do not significantly change the shareholding.This means that institutional site visits play different roles for different types of institutional investors.For holding institutional investors,institutional site visit plays the role of monitoring the existing value.For transactional institutional investors,institutional site visit plays the role of value discovery.(2)The analysis of holding strategy of institutional investors reveals that the main purpose of institutional investors holding listed companies’ shares is to gain the appreciation of stock.The empirical study finds that the positive volatility of the stock price growth rate of the visited companies strengthen the positive correlation between the intensity of institutional site visit and the shareholding ratio of transactional institutional investors,but does not change the correlation between the intensity of institutional site visit and the shareholding ratio of holding institutional investors.This reflects that there are differences in the holding strategies of different institutional investors.Transactional institutional investors are more concerned about short-term value and holding institutional investors are more concerned about long-term value.(3)Additional analysis of institutional site visit reveals that there is a correlation between the intensity of institutional site visit and the performance of visited companies.The shareholding ratio of different types of institutional investors has different influences on this correlation.The shareholding ratio of transactional institutional investors strengthens the positive correlation between the intensity of institutional site visit and the performance of the visited companies.The shareholding ratio of holding institutional investors does not strengthen the positive correlation between the intensity of institutional site visit and the performance of the visited companies.The main contributions of this paper are as follows.First,from the perspective of information efficiency,this paper tests the impact of institutional site visit on the shareholding choice of institutional investors,which is helpful to have a deeper understanding of the behavior of institutional investors.Second,from the perspective of heterogeneity of institutional investors,this paper examines the impact of differences in investment strategies on institutional site visit,which helps to better understand the economic consequences of institutional site visit.Third,from the perspective of institutional investors’ shareholding strategy,this paper investigates the impact of the positive volatility of the stock price growth rate on the correlation between the intensity of institutional site visit and the shareholding ratio of institutional investors,which provides reference for listed companies to distinguish motivations of heterogeneous institutional site visit.