Do long-term institutional investors constrain managerial disclosure opportunism? Evidence from insurance ownership
研究发现保险所有权显著约束了企业报告小正盈余惊喜的机会主义行为，主要通过加强内部监控和吸引外部关注实现，对新兴市场鼓励价值投资有启示。
Focusing on the relationship between insurance ownership and firms’ incentives to report small positive earnings surprises, this study examines whether long-term institutional investors constrain short-term opportunistic disclosures. This study finds that firms display a salient bunching of small positive earnings surprises owing to adverse regulatory consequences for loss firms and insurance ownership significantly constrains such behaviours. The mechanisms are mainly through strengthening internal monitoring and attracting external attention. Meanwhile, this negative relation is more pronounced when other investors have a shorter investment horizon, or managers have stronger incentives to exaggerate earnings escorting their insider selling. By using Growth Enterprise Market reform as a quasi-natural experiment, the results remain consistent. This study more fully explains the economic consequence of investor horizon and provides a new perspective on the motivation of managerial disclosure opportunism. Furthermore, this study draws important implications for emerging markets for encouraging value investment and provides important guidelines for governments to better leverage the leading role of insurance institutions when setting policies to maintain the healthy and sustainable development of the capital market.