Research About The Impact Of Limited Attention Of Institutional Investors On Corporate Risk-taking

As an important participant in the capital market,institutional investors usually have more information channels and more professional researchers,and are able to explore the intrinsic value of listed companies and conduct continuous tracking and research on listed companies,and participate in the operational decisions and corporate governance of listed companies.Institutional investors often hold stocks of multiple companies in their portfolios.Due to time and energy constraints,when an industry in the portfolio is subject to an exogenous shock,institutional investors may focus on the shocked industry and pay less attention to the unshocked industry.Institutional investors’ distraction due to exogenous shocks can lead to weakened motivation and ability of institutional investors to participate in business decisions.Therefore,this paper uses data from non-financial listed firms in Shanghai and Shenzhen A-shares from 2013-2019 as the research sample to investigate the impact of distracted institutional investors on corporate risk-taking.This paper draws the following conclusions:institutional investors’ limited attention significantly reduces the level of corporate risk-taking,and there is a strong robustness of the above findings;the inhibitory effect of institutional investors’ limited attention on corporate risk-taking is stronger when external supervision is weaker,specifically the less media coverage and poorer external audits;as for the impact path,institutional investors’ limited attention reduces corporate risk-taking by reducing corporate transparency,which in turn reduces corporate As for the path of influence,the limited attention of institutional investors reduces corporate risk-taking by decreasing corporate transparency,while the limited attention of non-independent institutional investors does not affect the level of corporate risk-taking.Institutional shareholders play an important role in corporate operation and decision-making,and regulators should guide institutional shareholders to better participate in corporate governance by reasonably relaxing market entry standards and restrictions on shares of listed companies held in the portfolios of institutional shareholders,especially relaxing restrictions on independent institutional shareholders.Enterprises undertaking risk-taking need resources in various aspects such as investment and financing,such as risky investment projects with positive net present value,capital,etc.Institutional investors can provide resources as well as professional support for enterprises.Therefore,institutional investors should continue to increase the supply of funds to the real economy,actively participate in the R&D investment of listed companies and the risk-taking of enterprises,and promote the steady and positive development of the real economy.