Institutional Investors,Product Marketcompetition And The Investment Efficiency

Investment decision-making is the most critical decision in corporate financial decision-making,and its effectiveness has a major impact on the macro economy and micro economy.In recent years,the growing investment has made China's economy grow at a high speed.However,due to the principal-agent and information asymmetry,the phenomenon of non-efficiency investment is also very common,which seriously hinders the sustainable development of enterprises.It has been found that monitoring the investment decision-making process of enterprises can effectively suppress non-efficiency investment.Institutional investors in China have developed rapidly with the development of capital markets and the support of policies.Compared with individual investors,institutional investors have stronger information superiority and better professional knowledge,when they become major shareholders with the increase of shareholding ratio,they should have the motivation to exercise control over the management decisions of the holding companies.This in turn affects investment efficiency.However,there is still controversy in the academic community about whether institutional investors can play an active role in corporate governance.Some scholars believe that institutional investors will increasingly play an active role in corporate governance as their shareholding ratio increases and they tend to directly monitor corporate behavior.Some scholars also believe that institutional investors do not play a role in corporate governance,they still focus on speculation.In addition,whether institutional investors can play an active role in governance will also be affected by the external environment.Product market competition,as an important place and information platform for enterprise competition,has played a certain role in mitigating the contradiction of principal-agent and information asymmetry.Therefore,the promotion effect of institutional investors on investment efficiency may be affected by different product market competition environments.In this theoretical and practical context,this paper attempts to explore whether institutional investors' shareholdings can have an impact on investment efficiency,and further distinguishes the types of institutional investors,and discusses the impact of stable institutional investors and transactional institutional investors on investment efficiency,and whether the effects are different in different product market competition environments.This paper takes the A-share listed companies in Shanghai and Shenzhen as samples from 2013 to 2017,and uses the Richardson model to obtain the non-efficiency investment degree which is used as the explanatory variable of this paper.Through the empirical research methods,using the logistic regression model,the paper tests the relationship between institutional investors and heterogeneous institutional investors and investment efficiency.At the same time,In order to further observe whether the effects of two types of institutional investors on investment efficiency are different in different product market competitions,this paper compares and analyzes the degree of product market competition and conducts regression analysis of interaction items in the robustness test.The study found that: First,the shareholding ratio of institutional investors is positively related to investment efficiency.With the increase of shareholding ratio,institutional investors have the motivation to use their professional advantages,information advantages and capital advantages to participate in corporate governance,effectively alleviating the problem of principal-agent and information asymmetry,and improving the investment efficiency.Second,the positive relationship between stable institutional investors and investment efficiency is more significant than that of transactional institutional investors.Stable institutional investors have stronger interests with enterprises due to their long holding period and high shareholding ratio.Under the dual influence of cost and income,stable institutional investors have stronger motivation to participate in corporate governance,fully utilize voting rights and supervise managerial behavior,thereby effectively reducing the probability of inefficient investment;Transactional institutional investors are more in line with the hypothesis of invalid supervision.Third,in the high-product market competition environment,the positive impact of stable institutional investors on investment efficiency is more significant;in the low-product market competition environment,the positive impact of transactional institutional investors on investment efficiency is more significant.High product market competition increases the bankruptcy liquidation risk of enterprises.In order to reduce the probability of enterprises being liquidated,stable institutional investors will strengthen supervision of managers,reduce their adverse selection and moral hazard behavior,and actively participate in the decision-making process in order to improve the long-term value of the business.However,transactional institutional investors have no incentive to participate in governance.Therefore,in the high-product market competition environment,they rely on product market competition to supervise managers.In the low-competitive product market,the market environment is relatively stable,and it is difficult for transactional institutional investors to obtain benefits from the volatility of stock prices.Therefore,in order to obtain good returns,they are motivated to participate in governance through their own professional knowledge and information advantages,thereby alleviating the problem of principal-agent and information asymmetry and improving investment efficiency.