Institutional Investors' Site Visits and Firms' Financial Distress

In this paper, we investigate whether and how institutional investors' site visits affect the financial distress of listed companies. By employing Chinese firms listed on the SZSE from 2013 to 2021, we find that institutional investors' site visits significantly restrain financial distress and that this effect is more pronounced for firms with lower-quality information environments and corporate governance. The results are robust to several robustness checks and pass two endogeneity tests. We further find that the effect of institutional investors' site visits on corporate financial distress is greater for groups of firms with larger institutional shareholding and that the effect of institutional investors' site visits on corporate financial distress in non-SOEs is more significant than that in SOEs. Finally, the restraints of financial distress caused by institutional investors' site visits can also improve firms' market value