The wider the span, the better the performance? Institutional ownership industry coverage and corporate total factor productivity

As the capital markets evolve rapidly, the interconnection and overlap of institutional ownership across industries have become increasingly common, and their influence on enterprise development is becoming more pronounced. The purpose of this paper is to investigate the micro-level effects of institutional ownership industry coverage (IOIC) on corporate total factor productivity (TFP). The results show that IOIC significantly enhances firm-level TFP. This effect operates primarily through three channels: governance enhancement, risk mitigation, and innovation stimulation. Heterogeneity tests reveal that the beneficial effect of IOIC on TFP is greater in state-owned enterprises, firms with broader operational scopes, and when analysts possess limited multi-industry expertise. Additionally, when institutional investors exhibit low industrial investment solidification, the productivity-enhancing effect is more substantial. Moreover, compared to horizontal industry coverage, vertical industry coverage within the industrial chain provides a larger incentive effect on enterprise TFP. These findings not only enrich the literature on common ownership and corporate productivity but also provide decision-making reference for promoting cross-industry investment governance of institutional investors and promoting high-quality development of enterprises.