In emerging markets characterized by signiffcant information asymmetry, mitigat-ing firm-level risk is paramount for market stability. While the governance role ofinstitutional investors is known, the impact of their direct, on-the-ground engagementremains underexplored. This study’s objective is to investigate how institutionalinvestor site visits, a crucial hands-on governance mechanism, affect stock returnvolatility. Using a sample of Chinese-listed A-share firms from 2012 to 2022, wefind that frequent site visits significantly reduce firm-level stock return volatility.This risk-reduction effect is more pronounced for firms with greater agency problems,poorer ESG performance, and higher expropriation risk. Our analysis, robust toendogeneity concerns, indicates this effect is driven by improved external oversight.We conclude that direct institutional engagement is a vital channel for reducinginformation asymmetry, enhancing corporate governance, and ultimately promotingmarket stability by lowering investment risk.

This paper uses the enactment of China’s 2007 Property Law (the Law), which reduces the risk of expropriation by local governments, as the setting to investigate the importance of property rights protection for private firm investment. Using propensity score matching and a difference-in-differences design, we find that firms facing weaker property rights protection prior to the Law significantly increase their investment and investment efficiency after the Law. Cross-sectional analyses document evidence consistent with a decrease in firms’ perceived expropriation risk as the main mechanism underlying the Law’s effect. Finally, we show that the Law improves local economic outcomes and employment.

We examine whether family firms differ from nonfamily firms in their corporate social responsibility (CSR) reporting practice. Using a sample of Chinese firms, we find that, compared to nonfamily firms, family firms are more likely to have a system in place that guides the establishment and development of their CSR activities. Family firms are also more likely to adopt the GRI guidelines, and they disclose significantly more information about their CSR practice. The findings are consistent with the notion that family firms are more long-term oriented, and as a result, they are more concerned about firm reputation and use CSR disclosure as a means to establish and maintain a good reputation and to legitimize their behavior. We further find that the positive relation between family firms and CSR disclosure exists mainly in those firms with relative high state ownership, which helps mitigate government expropriation risk. Our research contributes to the limited literature on the relation between family firms and CSR practice. We also contribute to the literature on the impact of government expropriation risk and its interaction with firm ownership structure on firm behavior.