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How does the geographic concentration of institutional investors affect corporate risk? Evidence from China

Author

Listed:
  • Lin, Luoxi
  • Wang, Peiyuan
  • Huang, Yilin

Abstract

By utilizing the geographic data of institutional investors from 2012 to 2023, this study investigates how the geographic concentration of institutional investors (GCII) affects firms’ stock price idiosyncratic volatility (IVOL). The findings indicate that the GCII significantly mitigates corporate information asymmetry and enhances internal governance quality, consequently reducing firms’ IVOL. Additional analysis reveals that the negative impact of the GCII on IVOL is pronounced for firms located in provinces with underdeveloped transport infrastructure and firms with lower analyst coverage.

Suggested Citation

  • Lin, Luoxi & Wang, Peiyuan & Huang, Yilin, 2026. "How does the geographic concentration of institutional investors affect corporate risk? Evidence from China," Research in International Business and Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:riibaf:v:82:y:2026:i:c:s0275531925004829
    DOI: 10.1016/j.ribaf.2025.103226
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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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