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Institutional investors’ site visits and firms’ financial distress

Author

Listed:
  • Cao, Jiawei
  • Dong, Dayong
  • Yue, Sishi

Abstract

In this paper, we investigate whether and how institutional investors’ site visits affect the financial distress of listed companies. By employing Chinese firms listed on the SZSE from 2013 to 2021, we find that institutional investors’ site visits significantly restrain financial distress and that this effect is more pronounced for firms with lower-quality information environments and corporate governance. The results are robust to several robustness checks and pass two endogeneity tests. We further find that the effect of institutional investors’ site visits on corporate financial distress is greater for groups of firms with larger institutional shareholding and that the effect of institutional investors’ site visits on corporate financial distress in non-SOEs is more significant than that in SOEs. We also find the restraints of financial distress caused by institutional investors’ site visits can also improve firms’ market value. Finally, the routine and unexpected visits have the same restraining effect on financial distress.

Suggested Citation

  • Cao, Jiawei & Dong, Dayong & Yue, Sishi, 2024. "Institutional investors’ site visits and firms’ financial distress," Research in International Business and Finance, Elsevier, vol. 67(PB).
    • Handle: RePEc:eee:riibaf:v:67:y:2024:i:pb:s0275531923002763
    DOI: 10.1016/j.ribaf.2023.102150
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    More about this item

    Keywords

    Institutional investors; Site visits; Financial distress; Information environment; Corporate governance;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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