Does the online interaction between retail investors and firm management affect capital structure?

Zhihui Du, Xiaojia Zheng, Chenye Zhang and Rongxi Zhou

Finance Research Letters, 2023, vol. 55, issue PA

Abstract: This paper examines whether and how online interactions between retail investors and firm management affect financial leverage. Using a sample of Chinese A-share listed companies from 2010 to 2021, we find that retail investors’ interaction with management, measured by the number of posts and replies in online interactive investor platforms, significantly decreases firms’ financial leverage by mitigating information asymmetry. Further analyses show that this negative relationship is stronger for firms with more opaque information environments measured by higher research and development intensity, greater asset intangibility, lower analyst coverage, and higher retail ownership. Our findings suggest that retail investors significantly impact firms’ financial leverage decisions, and provide positive evidence for information disclosure reform in an emerging capital market.

Keywords: Retail investors; Investor interactive platforms; Information disclosure; Information asymmetry; Capital structure (search for similar items in EconPapers)
JEL-codes: D83 G14 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323002088
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002088

DOI: 10.1016/j.frl.2023.103835

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().