Supervision of not-for-profit minority institutional shareholder and total factor productivity of listed companies: evidence from China

This study examines the efficacy of the China Securities Investor Services Center (CSISC), an advanced minority shareholder safeguard mechanism endorsed by the China Securities Regulatory Commission, in promoting high-quality development of listed companies. Employing a difference-in-difference analysis for a sample of Chinese listed companies during 2013-2017, we find that CSISC shareholding significantly improves the total factor productivity of listed companies. The channel analyses demonstrate that promoting R&D investment and reducing operating costs serve as channels via which the CSISC shareholding can promote total factor productivity. Additional analyses reveal that the impact of CSISC shareholding on total factor productivity is influenced by regional, firm, and executive characteristics. Finally, CSISC shareholding also increases firm value. These findings contribute to the literature on the economic consequences of the CSISC shareholding and the factors influencing total factor productivity.