The duration of Social Security Fund shareholding and investment efficiency

Abstract

We investigate the impact of Social Security Fund shareholding duration on corporate investment efficiency in China from 2012 to 2022. The empirical results indicate that a longer duration of Social Security Fund shareholding has a significantly positive impact on corporate investment efficiency. The enhancements in investment efficiency exhibit regional heterogeneity. We also find that the stability and persistence of Social Security Fund shareholding contribute to these improvements. Mechanism analysis reveals that longer Social Security Fund shareholding duration improves investment efficiency through internal and external channels by reducing agency costs, mitigating managerial myopia, and enhancing corporate reputation. Our findings provide guidance for policy-makers, institutional investors, and companies in recognizing the role of the Social Security Fund and optimizing investment outcomes.