Can Institutional Investors’ Shareholding Promote Organizational Turnarounds?

The epidemic,which lasted for three years,plunged companies in the market into a dilemma of dramatically increased business risks,financing difficulties and tight cash flow,with many failing to survive the epidemic and declaring bankruptcy.Three years have passed and the economy and society have restarted,market vitality has begun to recover,and the advent of the "post-pandemic" era has brought some good news.At the same time,the US Federal Reserve has been raising interest rates,the Russia-Ukraine conflict is intensifying,energy costs in Europe are too high,China’s real estate market is in a downturn,a new round of recession has followed,many countries have seen varying degrees of economic decline.On the other hand,domestic demand contradiction is still prominent and balance sheet repair of micro-main body still needs time.The external environment for business operations remains complex and grim.Under the complicated external environment,how to reverse the trend of performance decline,get out of the predicament,and promote the transformation of crisis enterprises is an important subject facing both the business community and the academic community.In this paper,the starting point of exploring how crisis enterprises successfully reverse the transformation is to explore whether institutional investors can effectively play a positive role to help enterprises survive the crisis and successfully reverse the transformation under the crisis situation of corporate performance decline.Given that financing is an important prerequisite for business activities,it is an important bottleneck and key to relief for enterprises in crisis;Investment is not only a necessary channel for enterprises to obtain long-term benefits,but also an important means for enterprises in crisis to achieve profit reversal.Therefore,this study intends to further reveal the "black box" and explore the mechanism of institutional investors’ effect on the reversal of enterprises in crisis from the perspectives of investment and financing.The results show that the promoting effect of institutional investors on the reversal of crisis enterprises is realized through the two ways of easing the financing constraints of enterprises and improving the efficiency of investment.In addition,considering the significant differences in the shareholding purpose and behavior of heterogeneous institutional investors,this paper tests whether the "national team" holds shares or not,and the difference in the role of domestic and foreign institutional investors,and the external environment will inevitably affect the role of institutional investors.Therefore,the influence of information transfer efficiency and economic policy uncertainty on institutional investors’ promotion of reversal realization effect is discussed.The results show that state-owned and domestic institutional investors have a more significant role in promoting the reversal of crisis enterprises.In an environment of high information transfer efficiency and economic policy uncertainty,institutional investors have a better effect on improving the reversal possibility of crisis firms.On the one hand,this paper includes institutional investors and crisis firm reversal into the same research framework,explores the influencing factors of crisis firm reversal from the new perspective of stakeholders,and further explores its influencing path based on investment and financing.Meanwhile,it also discusses the difference of the role of heterogeneous institutional investors and and the influence of environmental variability on the governance role of institutional investors.It extends the study of reversal strategies of crisis firms and enriches the study of the economic consequences of institutional investors’ shareholding.On the other hand,reminding enterprises to pay attention to the key role of stakeholders in the face of crisis provides new ideas and practical reference for enterprises in recession to realize organizational turnarounds.