Institutional Investors’ Site Visits,Policy Uncertainty Of Economics And Corporate Inefficient Investment

In recent years,China’s economy has grown rapidly because of the increasing investment.Investment decision-making has a significant impact on macroeconomics and microeconomics.However,the inefficient investment is very common.And the over-investment and under-investment is common in Chinese companies,which seriously hinders the sustainable development of enterprises.The former researchers did a lot on the inefficient investment,and this article is focusing on the aspect of institutional investors.Institutional investors have professional advantages and capabilities for information mining,collection,screening,interpretation and processing.It not only plays an important role in the capital market,but also plays an important role in corporate governance as an important external force to establish and improve the corporate governance structure.Site visit is an important way for investors to obtain company information.Through visits,the investors can understand the information status of business management and the development planning in a deeper way,so that they can tap more value information,and make better investment decisions.Most of the former research focuses on the impact of institutional research on the capital market,investors’ decisions and the corporate governance.Can institutional site visits be used as an effective external governance mechanism to improve the company’s investment efficiency? What the effects of the heterogeneity of institutional investors on corporate investment efficiency? In addition,from the perspective of the country’s macroeconomic environment,the uncertainty of China’s macroeconomic operation has gradually increased.Then how does the instability of economic policy affect the relationship between site visits and corporate investment efficiency?Based on this,this article mainly studies and solves the following problems.Firstly,study the impact of site visits by institutional investors on inefficient corporate investments,and the impact of the heterogeneity of institutional investors on inefficient corporate investments.Secondly,study the changes of the impact between institutional investors’ site visits and inefficient investment of enterprises under the environment of high economic policy uncertainty.This article takes the Shenzhen A-share non-financial companies as the research object from 2013 to 2017,and uses the literature research method and empirical test method.Based on the investor relationship management theory,principal-agent theory and information asymmetry theory,this paper is aimed to verify the relationship between site visits and inefficient investment under the economic policy uncertainty.The conclusions are as followed:(1)The site visits by institutional investors have a great effect on mitigating the degree of information asymmetry and resolving the principal-agent problem.Site visits can urge and supervise the management of the company to govern the company more effectively,including inhibiting the inefficiency of the company investment.In addition,institutional investors have professional knowledge reserves,excellent analytical capabilities,and broad resource channels.So that they can make full use of their advantages in the visits and participate in practical issues of corporate governance in order to maximize corporate value,which can inhibit the inefficient investment behavior of enterprises.(2)Different types of institutional investors have different inhibitory effects on corporate inefficient investments.The inhibitory effect of brokers is the most obvious.The next is private equity and fund companies,and the insurance companies will not inhibit the inefficient investment of enterprises.(3)Under the circumstances of unstable macro environment and frequent changes in economic policies,institutional investors can conduct more careful visits and inspections.The unstable macro environment has increased their vigilance and strengthened their effectiveness in participating in corporate governance.Moreover,it can use the rich information resources of institutional investors to reduce the unfavorable factors of economic policy uncertainty for enterprises,and strengthen the inhibitory effect of site visits on inefficient investment by enterprises.Through the research in this article,we find that institutional investors can effectively play an external monitoring role,reduce the degree of information asymmetry in the enterprise through investigation,and can regulate and constrain managers’ behavior and effectively alleviate the problem of agency of the enterprise,thereby improving and enhancing the company governance level,and further improving the efficiency of corporate investment.The above results verify the effectiveness of the external governance role of institutional research,provide empirical evidence for the impact of institutional research on corporate behavior,and illustrate the important role and significance of institutional site visits.