Common Institutional Ownership And Inefficient Investment In Firms

With strong capital scale,rich industry research experience and professional investment management team,institutional investors have become the core force active in the capital market.With the gradual maturity of the development of the domestic capital market,it is increasingly common for institutional investors to hold equity in multiple enterprises in the same industry.The common institutional ownership network formed by institutional investors holding multiple enterprises in the same industry can make the interconnection between enterprises in the same industry increasingly close,promote the coordination and cooperation between enterprises and resource exchange,and have a significant impact on the business management activities of enterprises.As an important means of optimizing resource allocation in the process of business management,investment activities largely determine corporate value and influence the development strategy and future direction of enterprises.However,the existence of principal-agent and information asymmetry problems often lead enterprises to make investment decisions that deviate from the best choice when conducting investment activities,and the problem of inefficient corporate investment has become increasingly common.How to improve the investment efficiency of enterprises has become a huge challenge faced by enterprises in the process of corporate management.Therefore,whether and how common institutional ownership can suppress inefficient investment by influencing the investment decisions made by enterprises when conducting investment activities is a realistic issue that deserves attention.This paper takes the non-financial listed companies in Shanghai and Shenzhen A-shares from 2011-2021 as the research sample,and takes the common institutional investors holding multiple listed companies in the same industry as the entry point to empirically study the impact of common institutional ownership on corporate inefficient investment;secondly,based on the perspectives of ESG performance,financing constraints and accounting information transparency,the mechanism path of common institutional ownership and corporate inefficient investment is explored;finally,in a further analysis,the differential effects of common institutional ownership on corporate inefficient investment under different property rights nature,market competition degree and management power are analyzed.The findings show that:(1)Common institutional ownership can effectively inhibit firms’ inefficient investment.(2)ESG performance,financing constraints and accounting information transparency play a mediating role between common institutional ownership and firms’ inefficient investment.Further research has found that:(1)Common institutional ownership has a more significant inhibitory effect on inefficient investment in non-state-owned enterprises.(2)Common institutional ownership has a more significant inhibitory effect on inefficient investment by enterprises in industries with high market competition.(3)Common institutional ownership has a more significant inhibitory effect on inefficient investment of enterprises when the power of management is low.Based on the above results,this paper puts forward corresponding policy recommendations from the perspective of the government,enterprises and institutional investors.The government regulatory authorities should attach importance to and guide the common institutional investors to actively participate in the capital market,improve the relevant capital market legal system,strengthen the identification and supervision of speculative common institutional investors,and provide a good institutional environment for the development of common institutional investors.Enterprises should make full use of the institutional ownership should make full use of the industry synergy and supervisory governance advantages brought by common institutional ownership,actively build a platform for information exchange and resource transfer among enterprises in the same industry,and improve the corporate governance level of enterprises.Institutional investors should enhance their own advantages and actively choose to invest in multiple listed companies in the same industry to generate economies of scale in supervision and governance to reduce governance costs.