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Investor-enterprise interactions and shadow banking of non-financial enterprises in China

Author

Listed:
  • Liu, Huan
  • Tao, Yunqing
  • Zeng, Lin
  • Chen, Dong

Abstract

Using the data of China A-share non-financial Enterprises from 2010 to 2019, this paper studies the impact of investor-firm interaction on shadow banking of non-financial enterprises in China. We find that the investor-enterprise interactions have a negative effect on shadow banking of non-financial enterprises, which still hold after robustness tests and endogeneity tests. In addition, our findings are more pronounced in non-state-owned enterprises and enterprises with high financial constraints. Finally, the mechanism tests show that investor-enterprise interactions can reduce the size of shadow banking through external governance channel and information asymmetry channel. Our study confirms that the interactions between retail investors and firms, exert governance effects on corporate decision-making, which has significant implications for the development of capital markets in emerging economies.

Suggested Citation

  • Liu, Huan & Tao, Yunqing & Zeng, Lin & Chen, Dong, 2023. "Investor-enterprise interactions and shadow banking of non-financial enterprises in China," Finance Research Letters, Elsevier, vol. 55(PB).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003513
    DOI: 10.1016/j.frl.2023.103979
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    References listed on IDEAS

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    Cited by:

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    2. Liu, Xiangqiang & Liu, Jiayi & Liu, Jia & Zhai, Qiong, 2024. "Can investor-firm interactions mitigate ESG rating divergence? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    3. Wu, Jiaxu & Yang, Yibing, 2024. "The impact of bank-enterprise distance on the digital economic value of manufacturing enterprises," Finance Research Letters, Elsevier, vol. 60(C).
    4. Luo, Zijun & Li, Mingyang & Hu, Xueqin & Xu, Hao, 2025. "Beyond awareness: How investor-initiated communications reduce corporate carbon emissions," Economic Modelling, Elsevier, vol. 152(C).
    5. Wang, Maochuan & Yan, Youliang, 2023. "The dark side of investor interactive platforms: Evidence from corporate investment efficiency," Finance Research Letters, Elsevier, vol. 57(C).
    6. Zhao, Yujie & Yao, Zhanghao & Li, Yuanqin & Zhou, Ping, 2023. "Can high-quality interactions lower the cost of debt? Insights from interactive investor platforms," Finance Research Letters, Elsevier, vol. 58(PC).
    7. Shi, Xiaohua & Zhi, Mingxing, 2023. "Managerial overconfidence and enterprise shadow banking," Finance Research Letters, Elsevier, vol. 58(PB).
    8. Huang, Xianhuan & Zhang, Yujia & Chan, Kam C. & Wang, Yao, 2024. "Digital tax enforcement and shadow banking of non-financial firms: Evidence from China's Golden Tax Project III," Finance Research Letters, Elsevier, vol. 70(C).
    9. Shu, Jinhan, 2024. "Social media, investor‒firm interactions and informational efficiency of stock prices: Evidence from China," Finance Research Letters, Elsevier, vol. 69(PA).
    10. Runyu Wang & Zili Zhang & Keng Leng Siau & Ziqiong Zhang, 2025. "Digital communications between firms and investors: Impact of explanatory responses on investor engagement in online financial Q&A," Electronic Markets, Springer;IIM University of St. Gallen, vol. 35(1), pages 1-24, December.
    11. Hou, Fang & Gao, Wangbo, 2025. "Legal consultation and strategic planning: High-quality legal advisors’ influence on corporate long-term development strategies," Finance Research Letters, Elsevier, vol. 80(C).
    12. Yan, Youliang & Wang, Maochuan & Hu, Guoliu & Jiang, Chengxin, 2024. "Does Confucian culture affect shadow banking activities? Evidence from Chinese listed companies," Research in International Business and Finance, Elsevier, vol. 68(C).

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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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