By using the data of Chinese firms with the state ownership structure, we examine whether institutional investors can help reduce the required return of equity for state-owned enterprises (SOEs) and non-SOEs. We find that an increase in the shareholdings of institutions especially independent...

Using data on Chinese firms with the unique state ownership structure of state-owned enterprises (SOEs), we examine whether institutional investors can help reduce the required returns on equity for SOEs or non-SOEs, and if so, the underlying channels. We find that an increase in the...