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281th BiweeklyAcademic Forum

Published:2019-05-17  Views:

 

Topic:How do institutional investors affect firm innovation in thepresence of the controlling shareholders? Evidence from China

 

Speaker:Xiaofei PAN is a senior lecturer/associate professor from Universityof Wollongong, Australia.Hereceived his Ph.D. in Finance from the University of Wollongong in 2011. Hisresearch interests are Empirical Corporate Finance and Corporate Governance, PoliticalCapital and its Impact, and Emerging Markets. His main research results havebeen published in Management Science, Journal of Corporate Finance,Journal of Banking and Finance and other journals. His researchachievements have won the Outstanding Paper Awards in international academicconferences for many times.

 

Time: 12:30-13:30,Wednesday, May 22, 2019

 

Venue:Room 913, Main Teaching Building in City Campus of CUFE

 

Moderator: AssociateProfessor Fuwei JIANG, the School of Finance at CUFE

 

Abstract: In this paper, weinvestigate the effect of institutional investors on firm innovation using alarge sample of Chinese listed firms from 2003 to 2015. We find that domesticmutual funds and Qualified Foreign Institutional Investors (QFIIs) havepositive effects on firm innovation and the effects of domestic mutual fundsare stronger than that of QFIIs. Moreover, domestic mutual funds’ effectsbecome stronger when their ownership is close to that of controlling shareholders.In contrast, encountered with the challenges from unique institutions anddifferent cultures, QFIIs tend to comply with the controlling shareholders andthus have weaker effect on firm innovation when their ownership is close to thecontrolling shareholder. These results are robust after correction forpotential endogeneity issues. We also find strong evidence that the effects ofinstitutional investors on firm innovation are consistent with the quiet lifemodel, rather than the career concern model, which is different from the US.Furthermore, the effects of domestic mutual funds are weaker in state-ownedenterprises, firms with lower profitability, and when firms complete thesplit-share structure reform. Overall, our findings suggest that the influenceof institutional investors is subject to their identities as well as thepresence and identity of the controlling shareholders in China where ownershipconcentration is prevailing and institutional environment is underdeveloped.



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