Common institutional ownership and excessive corporate leverage: evidence from China
This study examines the impact of common institutional ownership (CIO) on excessive leverage in Chinese listed firms. The results show that CIO significantly reduces excessive corporate leverage. Mechanism analysis indicates that CIO mitigates excessive leverage by improving equity financing and enhancing corporate governance. This effect is more pronounced in firms with more stable institutional investors and lower analyst coverage, and holds for both state-owned and non-state-owned enterprises. Furthermore, the deleveraging effect of CIO also helps reduce inefficient investment and lower debt default risk.
Authors
- Qian Liu
- Jun Bai
Institutions
- Shihezi University (CN)
Publication Details
- Journal
- Asia-Pacific Journal of Accounting & Economics
- Published
- 2026-06-16
- DOI
- https://doi.org/10.1080/16081625.2026.2688833
- Primary Topic
- Corporate Finance and Governance
- Type
- article
- Field-Weighted Citation Impact
- 0.00
Funders
- National Natural Science Foundation of China