Do Institutional Investors Improve Firms' Inefficient Investment?

摘要

This paper examines the extent of firm level inefficient investment and its relation to institutional investors based on the sample of Chinese listed companies in the manufacturing industry from 2002 to 2006. We find evidence that both over-investment and underinvestment exist in the manufacturing listed companies in China. Institutional investors appear to play a weak role in mitigating over-investment but they can improve underinvestment significantly.