Study On The Effect Of Securities Analysts Following On Labor Investment Efficiency

Securities analysts were emerged with the development of the capital market and play an important role in the market.A large number of literature studies have shown that securities analysts can professionally interpret public information,mine private information,and then publish relevant research reports,which can effectively improve the speed and breadth of information dissemination,reduce the degree of market information asymmetry,and exert strong external supervision.Thus,securities analysts improve corporate investment efficiency,such as capital expenditure investment efficiency,merger efficiency,innovation efficiency,and so on.Labor investment is an important part of corporate investment,and its investment effectiveness is also affected by agency problems and financing constraints caused by market friction.However,due to the special characteristics of labor investment,the relationship between security analysts follow up and labor investment efficiency needs further empirical testing.Based on this,this paper takes the A-share listed companies in China’s Shanghai and Shenzhen stock exchanges from 2003 to 2018 as the research object to empirically examine the effect of securities analysts’ following on the efficiency of corporate labor investment,and investigate whether this effect will be different because of corporate heterogeneity.The research results show that:First,securities analysts’ following is significantly negatively correlated with the inefficient labor investment of enterprises,that is,securities analysts’following can restrain the overinvestment of enterprise labor,alleviate the underinvestment of labor,and improve labor investment efficiency;Second,The effect of securities analysts’following on the efficiency of labor investment is more significant in non-state-owned enterprises.The government’s intervention in the employment of state-owned enterprises has weakened the governance effect of securities analysts’ following;Third,the impact of the securities analysts’ following on the efficiency of corporate labor investment is more significant in companies with higher agency costs,because as agency conflicts intensify,the securities analysts’ following will have a greater effect on the supervision of companies;Fourth,the impact of securities analysts’ following on the efficiency of corporate labor investment is more significant in companies with severe financing constraints,because companies with more difficult financing need securities analysts to perform information transmission functions,alleviate adverse selection problems,reduce financing costs,and attract more investors.Fifth,the effect of securities analysts’ following on the efficiency of corporate labor investment is more significant in companies with higher labor adjustment costs.These companies have to prepare larger amount of fixed capital for labor investment and the shareholders have stronger motivation of monitoring the investment activities of the management,in which case the securities analysts play a greater role.Furthermore,this paper studies the moderating effect of securities analysts’ predictive ability and the degree of regional marketization.In addition,this paper adopts the instrumental variable method and the propensity score matching method(PSM)to alleviate the endogenous problem and exclude the impact of other types of investment expenditures,thus ensuring the reliability of the conclusions.Finally,based on the research conclusions of this paper,relevant policy recommendations are given from the perspectives of companies,securities analyst industry,government and regulatory agencies.This paper expands the research on the factors affecting the efficiency of labor investment in enterprises,and provides incremental evidence for the research on the market functions and economic consequences of securities analysts,which is conducive to providing new perspectives and ideas for enterprises to improve labor investment efficiency.At the same time,this paper helps raise the awareness of market participants about the analyst industry.