Seeing is not necessarily the truth: Do institutional investors' corporate site visits reduce hosting firms' stock price crash risk?

Gao, Shenghao; Cao, Feng; Liu, Xiangqiang

doi:10.1016/j.iref.2017.09.013

Cited by 57 publications

(37 citation statements)

References 45 publications

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“…In contrast, we show that the increase effect and the reduction effect are dominant at different visit frequencies. This nonlinear relationship explains their conclusions from a more comprehensive perspective and provides detailed evidence for management opportunistic behaviour mentioned by Gao et al (2017).…”

Section: Introductionmentioning

confidence: 63%

“…Therefore, institutional investors' visits will act on stock price crash risk through their impact on information quality and corporate governance. Gao et al (2017) argue that institutional investors' visits will reduce stock price crash risk, while Lu et al (2018) find a positive relationship between visit frequency and stock price crash risk. The inconsistency of the above conclusions confirms that the impact of institutional investors' visits has two sides due to management opportunism.…”

Section: Introductionmentioning

confidence: 98%

“…Most relevant to our study, Gao et al (2017) note that institutional investors' visits would raise stock price crash risk due to managers' incentive to withhold bad news. They argue that the increase effect and the reduction effect of institutional investor visits on stock price crash risk occur at the same time at any visit frequency and the reduction effect is more substantial.…”

Section: Introductionmentioning

confidence: 99%

“…The decline in information asymmetry can strengthen corporate governance mechanisms, while institutional investors basically exert a monitoring role on management through their communications (Holland, 1999;Jiang and Yuan, 2017). Indeed, the very act of visiting a company can negatively impact the interests of the management team, such as inducing a stock price decline (Bartov et al, 2002;Gao et al, 2017) or elevating litigation risk (Johnson et al, 2001;Baginski et al, 2002;Rogers and Van Buskirk, 2009). Intuitively, information disclosure may restrain management behaviour.…”

Section: Introductionmentioning

confidence: 99%

“…We contribute to the literature in the following ways. First, relative to Bushee et al (2011) and Gao et al (2017), we describe our empirical analysis to clarify the impact of management opportunistic behaviour on institutional investors' information seeking from the perspectives of motivation and implementation space. This provides deeper micro evidence for management's opportunistic behaviour in the process of institutional investors' information seeking, and will promote the development of related research.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Institutional investors’ information seeking and stock price crash risk: nonlinear relationship based on management’s opportunistic behaviour

Wang

Liu

Xiong

2020

Accounting & Finance

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This paper examines the influence of management’s opportunistic behaviour on the relationship between institutional investors’ visits and stock price crash risk. We find that the relationship between visit frequency and stock price crash risk is inverted U‐shaped because of management’s opportunistic behaviour aiming at avoiding the negative impacts of visit. Institutional investors’ visits raise stock price crash risk when visit frequency is low and it can reduce crash risk just when visit frequency is high enough. This nonlinear relationship is more significant when management’s opportunistic behaviour is highly motivated and the implementation space is larger.

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Section: Introductionmentioning

confidence: 63%

Section: Introductionmentioning

confidence: 98%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Institutional investors’ information seeking and stock price crash risk: nonlinear relationship based on management’s opportunistic behaviour

Wang

Liu

Xiong

2020

Accounting & Finance

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Information acquisition or just going through the motions? Institutional investors' site visits and green innovation

Shi,

Wang

2024

Corp Soc Responsibility Env

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The importance of green innovation in global sustainable development is increasingly recognized. Literature has documented that enhancing external oversight can improve green innovation performance. However, few studies systematically investigate the relationship between external supervisory behavior and green innovation. This study employs a game‐theoretic model to examine the relationship between institutional investors' site visits (SVs) and green innovation. Using a unique dataset covering SVs from 2012 to 2021, empirical findings reveal that institutional investors' SVs are dramatically favorable to green innovation performance, particularly among stress‐resistant institutional investors. More broadly, SVs by institutional investors with higher shareholdings and stronger reputations exhibit a substantial response to green innovation. Similarly, institutional investors' SVs significantly boost the green innovation of firms with inadequate environmental disclosure. Additional analysis documents that the quality improvement of green innovation significantly increases after institutional investors conduct more than three SVs in a calendar year. This study proposes that policymakers should improve the institutional environment for site visits, and enterprises can strategically involve institutional investors to enhance external monitoring mechanisms. The theoretical and practical implications of this contribute to boosting green innovation capabilities.

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Corporate site visits and financial report quality

Dao

Sun

2022

J Corp Accounting Finance

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This study examines the association between corporate site visits and visited firms’ financial reporting quality. Using a sample of publicly listed firms in China for the years 2009 through 2018 and four different measures of financial reporting quality, we find that firms receiving more site visits have higher financial reporting quality. Specifically, we find that corporate site visits are associated with a lower level of accrual‐based earnings management and a lower likelihood of financial violations and financial restatements. Moreover, we document a positive association between corporate site visits and the evaluation of earnings disclosure quality. We also find some evidence that the positive association between site visits and financial reporting quality is more pronounced among firms with greater institutional ownership and among state‐owned enterprises. Taken together, our findings underscore the monitoring role of corporate site visits in enhancing visited firms’ financial reporting quality. This research could be of interest to regulators and institutional investors by providing insight into assessing the benefits of selective access events that may influence the quality of financial reports.

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Seeing is not necessarily the truth: Do institutional investors' corporate site visits reduce hosting firms' stock price crash risk?

Cited by 57 publications

References 45 publications

Institutional investors’ information seeking and stock price crash risk: nonlinear relationship based on management’s opportunistic behaviour

Institutional investors’ information seeking and stock price crash risk: nonlinear relationship based on management’s opportunistic behaviour

Information acquisition or just going through the motions? Institutional investors' site visits and green innovation

Corporate site visits and financial report quality

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