Institutional investor information network and corporate risk taking

Xiao-Li Gong, Ya-Li Dong and Xiong Xiong

Research in International Business and Finance, 2025, vol. 79, issue C

Abstract: Institutional investors form the network through common heavy holdings, and there is information sharing in the network. This paper examines the impact of institutional investor information sharing on corporate risk taking. It is found that the information sharing of institutional investors can bring about the effect of external supervision and resource advantage, and significantly improve the level of enterprise risk taking. The mechanism analysis shows that the information sharing of institutional investors can improve the level of corporate risk taking mainly by reducing the information asymmetry and restraining the herding behavior of analysts. Further analysis shows that in the enterprises with high degree of financialization, high degree of financing constraint, no political connection, high agency cost, good internal control quality, good legal environment, and growth stage company, information sharing has a greater effect on the improvement of enterprise risk taking. This paper has enriched the study of social network and corporate risk taking, and has positive practical significance for enterprises to improve the efficiency of investment decision-making.

Keywords: Institutional investor; Information sharing; Risk taking; Information asymmetry; Herding behavior of analysts (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:79:y:2025:i:c:s0275531925003551

DOI: 10.1016/j.ribaf.2025.103099

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