The establishment of a well-developed,multi-tiered cap-ital market system,alongside the enhancement of market-oriented incentive and restraint mechanisms,is crucial for developing a modern capital market with distinct Chinese characteristics.Insti-tutional investors are central to this process,as they play a vital role in optimizing resource allocation,mitigating investment risks,and fostering financial market stability.Despite their significant role,the academic literature remains divided on the impact of institution-al investors on corporate governance.While institutional ownership has the potential to enhance information environments,boost inno-vation inputs and outputs,and improve the effectiveness of execu-tive compensation contracts,it also carries the risk of inefficiencies in resource allocation,reduced corporate innovation capacity,and detrimental effects on long-term value.Exchange-traded funds(ETFs)serve as a pivotal investment tool for institutional investors,characterized by their low transaction costs,high liquidity,and flexible arbitrage opportunities.These attributes uniquely impact corporate governance and capital markets com-pared to traditional institutional investors.Specifically,the creation and redemption mechanism of ETFs enables risk-free arbitrage:when the market price of an ETF,driven by short-term supply and demand fluctuations,falls below its net asset value(determined by the fundamentals of the underlying assets),investors can purchase ETF shares in the secondary market,redeem the underlying assets in the primary market,and subsequently sell these assets back in the stock market.Conversely,if the ETF price exceeds the net asset val-ue,investors can exploit the reverse process for profit.This mecha-nism draws substantial short-term trading activity,enhances stock liquidity,and ultimately exerts pressure on management decisions through increased capital market dynamics.Existing research reveals a dual impact of ETFs on financial mar-kets.On one hand,ETFs enhance the efficiency of information dissemination by rapidly embedding systemic surplus information into stock prices and increasing the return synchronicity among un-derlying companies.On the other hand,the creation and redemption activities associated with ETFs introduce non-fundamental demand shocks,which can amplify individual stock liquidity and synchro-nize liquidity across other stocks,leading to distortions in asset prices and heightened systemic risk.As of 2021,the market value of ETFs holding A-share listed companies has approached 1 trillion yuan,with ETFs encompassing over 80％of listed companies,and this trend is accelerating.Consequently,investigating the impact of ETFs on the influence of institutional investors in corporate gover-nance is both theoretically and practically crucial.Given that ETFs primarily track specific indices and maintain relatively dispersed holdings,conventional corporate governance mechanisms,such as"voting with hands"and"voting with feet",become less effective.In this context,investigating how ETFs,as a distinctive investment vehicle,impact managerial decision-making offers valuable insights into new approaches for institutional inves-tors'involvement in corporate governance.This paper argues that the unique creation and redemption mechanism of ETFs provides investors with risk-free arbitrage opportunities,thereby influencing the liquidity of the underlying stocks and offering short-term inves-tors a cost-effective means of entry and exit.This dynamic increas-es the likelihood of"voting with their feet."Additionally,because short-term investors prioritize immediate profitability,their influx can shift management's decision-making focus,incentivizing com-panies to emphasize short-term gains at the expense of long-term investments.Consequently,this paper anticipates that the increased stock liquidity associated with ETF ownership will heighten man-agerial pressure for short-term performance,leading to a rise in short-termist behaviors.Based on a sample of A-share listed companies from 2011 to 2021,the findings of our study indicate a significant negative relationship between ETF ownership and crucial long-term investment metrics,such as corporate capital expenditure,the proportion of new fixed assets,and R&D investment,suggesting that ETF ownership inten-sifies managerial short-termism.Mechanism tests reveal that ETF ownership increases stock liquidity,thereby reducing transaction costs associated with buying and selling shares of the underlying companies.This heightened liquidity attracts a substantial number of short-term traders,who,in turn,pressure management to focus on short-term performance,thus distorting resource allocation ef-ficiency.Heterogeneity analysis further shows that the impact of ETF ownership on managerial short-termism is more pronounced in firms with weaker internal controls,greater separation between ownership and control,higher agency costs,lower analyst coverage,and smaller market capitalization.Additional tests illustrate that ETF ownership does not significantly enhance investment efficien-cy,curb excessive investment,or promote long-term value growth,thereby discrediting the competing hypothesis that"ETF ownership improves stock liquidity,increases the informational content of stock prices,reduces financing costs,and thereby mitigates mana-gerial short-termism."Theoretically,this paper offers several important contributions.Firstly,it advances the understanding of ETF ownership by ex-ploring its economic consequences from a corporate governance perspective.While prior research has largely concentrated on ETFs'effects on earnings information dissemination and capital market efficiency,this study shifts the focus to how ETFs influence man-agerial behavior,demonstrating that ETF ownership exacerbates managerial short-termism and undermines long-term corporate value.Secondly,the paper provides new ETF-based evidence on the role of institutional investors in corporate governance,revealing that ETFs,as a major investment tool,enhance stock liquidity,re-duce transaction costs,and attract numerous short-term investors,thereby reinforcing managerial short-termism.Last but not least,it expands the literature on managerial short-termism by examin-ing how ETFs serve as a channel that enables short-term traders to influence managerial decisions.This adds to the existing research which has typically explored short-termism through capital market pressures,executive incentives,and information disclosure,and highlights how ETFs contribute to the phenomenon by providing additional mechanisms for short-term trading influence.The findings of this study also carry significant policy implications.First,authorities should encourage companies to enhance their performance evaluation systems by integrating both short-term and long-term metrics.This integration will improve resource allocation efficiency and create a more supportive environment for nurturing innovative enterprises with core competitive advantages.Second,the study reveals that the low-cost,high-liquidity,and flexible cre-ation and redemption mechanisms of ETFs attract numerous short-term traders,intensifying arbitrage activities and adversely impact-ing corporate governance.This finding suggests a need for stricter regulatory oversight of institutional investors and other market par-ticipants,as well as a thoughtful design of financial products to en-sure they support optimal resource allocation,mitigate market risks,and enhance corporate governance.Third,effective supervision and timely information dissemination,supported by analyst coverage,are crucial for embedding fundamental information into stock pric-es and reducing agency costs.Policymakers should therefore refine information disclosure regulations,standardize disclosure practices among listed companies,and bolster the role of market intermedi-aries in interpreting and conveying information.Finally,the current market's information frictions and transaction costs create signif-icant arbitrage opportunities,leading investors to prioritize short-term gains and exacerbating the problem of adverse selection,which impedes corporate growth and economic development.To address this"prisoner's dilemma",it is crucial to focus on investor educa-tion,enhance financial literacy,and implement measures to prevent and mitigate financial risks.Such steps are essential for ensuring financial stability and fostering sustainable economic development.
万方数据
维普
