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The governance role of institutional investors in information disclosure: Evidence from institutional investors’ corporate visits

Yuchen Lin (Sun Yat-Sen University, Guangzhou, China)
Yangbo Song (School of Management and Economics, Chinese University of Hong Kong, Shenzhen, Shenzhen, China)
Jinsong Tan (Center for Accounting, Finance and Institutions, Sun Yat-Sen University, Guangzhou, China)

Nankai Business Review International

ISSN: 2040-8749

Article publication date: 7 August 2017



As an important participant in capital market, institutional investors play a principal role in improving corporate governance. Most existing studies have focused on institutional ownership and its economic consequences. Nevertheless, they have not provided sufficient insight on the governance behavior of institutional investors as well as the underlying incentive mechanism. This paper aims to analyze the governance role of institutional investors in information disclosure and provide related evidence.


The authors propose a novel theory to analyze the institutional investors’ behavior of active governance and shows that such behavior significantly improves the quality of corporate information disclosure. The authors then conduct an empirical test by using the hand-collected data of institutional investors’ corporate visits during 2009-2014 in ChiNext.


This paper finds that the firms visited by institutional investors are more likely to have a greater tendency of disclosing more information than the firms that have never been visited. In particular, a higher frequency of visits or a larger number of participating institutional investors leads to a higher degree of disclosure. Consistent with the notion that on-site visits endow institutional investors with more frequent and active interaction with the firms, the authors find that the results are stronger for firms which are visited on-site, when compared with other information acquisition activities such as online meetings, conference calls and investor meetings. In addition, the effect of a site visit is greater when the site visit is conducted by securities companies or funds rather than insurance companies or QFIIs. Finally, the test of the direction of causality suggests that visits conducted by institutional investors leads to more information disclosure, rather than the reverse. Collectively, these results show that institutional investors’ participation enhances corporate information disclosure.


This paper explores the internal mechanism that institutional investors affect corporate governance by improving information disclosure through their corporate visits. This is the first study to investigate the influence of institutional investors’ corporate visits and their economic consequences.



The authors thank the four anonymous reviewers for their comments. The authors thank the financial support provided by National Nature Science Foundation (71272196, 71572206), Key project of Human and Social Science Funds of Guangdong Province (2012JDXM-0002) and China Ministry of Finance’s Project to Support Accounting Masters.

The views in this article are those of the authors and not necessarily those of Shenzhen Stock Exchange.


Lin, Y., Song, Y. and Tan, J. (2017), "The governance role of institutional investors in information disclosure: Evidence from institutional investors’ corporate visits", Nankai Business Review International, Vol. 8 No. 3, pp. 304-323.



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