The Impact of Institutional Investor Ownership on Corporate Financial Risk - Empirical Evidence and Heterogeneity from Listed Companies in China

DOI

10.2991/978-94-6239-801-6_68How to use a DOI?

Keywords

Institutional Investors; Corporate Financial Risk; Heterogeneity; The Nature of Property Rights; Risk Taking

Abstract

Under the background of China’s increasingly mature capital market, institutional investors have become the dominant force affecting resource allocation and market trend. Using data from companies listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange from 2015 to 2024, this paper explores in-depth how their stock behavior affects corporate financial risks. According to the study, unlike the ‘supervisory effect’ common in mature markets, rising shares of Chinese institutional investors have been shown to considerably exacerbate the financial risk of the company as a whole. Further heterogeneity analysis shows that there is a significant heterogeneity across ownership types in this “risk intensification effect”. In private enterprises lacking implicit guarantee, institutional shareholding significantly pushes up the risk level, while in state-owned enterprises, the impact is not significant, potentially due to the implicit guaranteed mechanism and governance constraints. In addition, the study also reveals that the “picking winners” of institutional investors often masks the real consequences of their higher risk, that is, institutions tend to hold large cap stocks with better fundamentals, thus presenting the illusion of low risk on the surface. This paper provides important empirical evidence for regulators to optimize classified regulatory policies and maintain financial security of private economy.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Yan Zhao
PY  - 2026
DA  - 2026/10/23
TI  - The Impact of Institutional Investor Ownership on Corporate Financial Risk - Empirical Evidence and Heterogeneity from Listed Companies in China
BT  - Proceedings of the 2026 2nd International Conference on Financial Innovation and Marketing Management (FIMM 2026)
PB  - Atlantis Press
SP  - 639
EP  - 648
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-801-6_68
DO  - 10.2991/978-94-6239-801-6_68
ID  - Zhao2026
ER  -