Institutional investors and corporate performance in the context of COVID-19 crisis: Evidence from China

Abstract

It is well-established that COVID-19 is an extreme public health crisis. It dramatically damaged the global economy, transportation, health care, and so on from January 2020. Using data from Chinese listed companies, this paper investigates the relationship between institutional investors and corporate performance and tests if institutional investors could help resist the adverse effect of COVID-19 on corporate performance. The main hypothesis of this paper is that institutional ownership, stability, and sensitivity have a positive effect on firm performance and weaken the negative impact of COVID-19 on firm performance. This paper uses a panel data model and first-quarter financial data and data of institutional investors from 2014 to 2020 to proceed with the study. The empirical test will be divided into three parts, analyzes the relationship between, institutional ownership, the stability of institutional investors, the sensitivity of institutional investors, and firm performance under COVID-19. The majority of previous research independently study the impact of institutional investors or COVID-19 on corporate performance. This paper enriches the literature that whether institutional investors can help companies resist the impact of covid-19, and provides recommendations for listed companies to introduce institutional investors.