Institutional Investor Research And Corporate Financialization

The real economy serves as the nucleus and basis of a country’s economic growth,while the financial system plays a vital role in offering support and services for the real economy.Nevertheless,in recent years,China’s economic progress has veered away from the natural integration of the real economy and financial system.Physical businesses have funneled significant amounts of capital into the financial industry,leading to the emergence of financial bubbles.This phenomenon not only damages the healthy development of the real economy,but also brings great risks to the financial system.The level of financialization of real enterprises can be altered by managerial decisions as well as investment and financing decisions.In the context of agency theory,managers utilize their informational advantages to engage in ambiguous earnings management,manipulate financial statements,and conceal the true operational and investment status of real businesses,all in an effort to achieve the owner’s tailored business objectives.Particularly during times of macroeconomic decline,the trend towards financialization in enterprises becomes more pronounced.In order to reduce the internal and external information imbalance and weaken the information advantage of the management of listed companies,it is necessary to establish an external supervision mechanism.Institutional investors possess a substantial pool of funds and a vast array of professional expertise,in contrast to external investors.Organizational research has the potential to enhance the subjective initiative of institutional investors and acquire firsthand information on listed companies.Institutional investors carry out thorough investigations on significant investment and financing decisions as well as management decisions made by corporate management,ensuring prompt disclosure of relevant information and enhancing the quality of information disclosure by listed companies.This contributes to enhancing the efficiency of investments in the capital market,long-term effective supervision of listed companies,reduce the motivation of management to whitewash performance through financial asset investment,and focus on the long-term development of the main business.Based on the impact of institutional investor research on corporate financialization,this thesis conducts theoretical and empirical research.First of all,this thesis makes a significant contribution to the study of the impact of institutional investor research on corporate financialization by conducting a comprehensive review of domestic and international literature and identifying a novel breakthrough.Drawing on the efficient market hypothesis,information asymmetry theory,principal-agent theory,and stakeholder theory,this thesis proposes a hypothesis that posits a negative relationship between the frequency of institutional investor research and the extent of corporate financialization.Secondly,this thesis develops a theoretical model and employs empirical analysis to examine the association between institutional investor research and corporate financialization,thereby validating the research hypothesis proposed.This thesis investigates the effect of institutional investor research on corporate financialization,utilizing a sample of A-share listed companies on China’s main board from 2013 to 2020.The empirical findings indicate that an increase in the frequency of institutional investor field visits or surveys is associated with a decrease in the level of corporate financialization.In addition,the study also found that the impact of institutional investor research on corporate financialization is significantly different among enterprises with different financing constraints,agency costs and property rights.Finally,the inhibition of institutional investor research on corporate financialization is achieved by improving the quality of corporate information disclosure.At the same time,this thesis has undergone a number of robustness tests to improve the reliability of the research conclusions.The research results of this thesis not only expand the understanding of institutional investors in the theoretical and practical circles,but also provide new ideas for macro and micro prevention of financial risks.