Institutional investor distraction and debt concentration

This paper investigates whether and how institutional investor distraction affects debt concentration using a sample of 25,434 firm-year observations for Chinese non-financial listed firms over the 2007–2021 period. Consistent with our hypothesis, we document robust evidence of a positive relation between institutional investor distraction and debt concentration, even after controlling for a wide range of firm characteristics. Further analysis suggests that the positive relation between institutional investor distraction and debt concentration is more pronounced for firms with weak external monitoring or less effective internal governance, and for firms with greater coordination concerns. Taken together, our study highlights the importance of institutional investor monitoring in shaping corporate debt structure.