Guidance or supervision: the impact of network relationship of institutional investors on corporate financialization

This paper examines the correlation between network relationship of institutional investors and the degree of corporate financialization. The results show that network relationship of institutional investors is positively related with corporate financialization, verifying the guiding effect hypothesis. After considering the heterogeneity of institutional investors, above relationship is merely evident in the sample of long-term institutional investors. Further research shows that the influence of institutional investors is particularly prominent in enterprises with information inferiority and high financial constraint as well as under tight monetary policy conditions.