Institutional investors? site visits and corporate employment decision-making

This study examines the effect of institutional investors' site visits on corporate employ-ment decision-making. Using a unique dataset of corporate site visits (CSVs) to the listed firms in China, we find that CSVs are associated with less labor investment inefficiency. The effect is more pronounced in firms with lower information quality, worse corporate governance, and severe financial constraints. Our results are robust to endogeneity con-cerns. Further analysis suggests that labor investment inefficiency leads to lower future performance. Overall, our results are consistent with the view that CSVs improve informa-tion quality, corporate governance, and access to finance, which in turn, mitigates ineffi-cient labor investment.(c) 2022 Elsevier Ltd. All rights reserved.