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This paper investigates the effects of institutional investor horizons on investment efficiency in China. By analysing 26,831 firm‐year observations from Chinese listed companies, we find that long‐term (short‐term) institutional ownership is negatively (positively) associated with the level of inefficient investments. A battery of robustness tests indicates causality. Further analyses reveal that the rise in environmental uncertainty and information asymmetry are transmission channels for increased inefficient investments. Moreover, we find that the single controlling shareholder and state owner can curb the management myopia induced by short‐term institutional investors while they do not impede the monitoring effort of long‐term institutional investors. [ABSTRACT FROM AUTHOR]

This article examines the effect of the institutional investment horizon on firms' earnings management and the moderating effect of state ownership. Using a sample of Chinese listed companies from 2010 to 2018, we find that a shorter institutional horizon leads to significantly more earnings management. Focusing on the interaction between the institutional horizon and state ownership, we find that the negative effect of short-term institutional shareholdings is weaker in state-owned firms. This article contributes to the existing literature by addressing the relationship between institutional investment horizon, state ownership, and earnings management in emerging capital markets. [ABSTRACT FROM AUTHOR]

This article investigates the impact of ESG screening on the portfolio value of four risk weighting models in the Chinese stock market from July 2012 to June 2019. Using a novel ESG rating data of CSI 300 composite stock, we show that: (i) ESG screening undermines the portfolio value of the equal-weighted (EW), value-weighted (VW), minimum variance (MVP), and reward-to-return (RRT) model. Portfolio models in the High-ESG group have the lowest out-of-sample return, Sharpe ratio, and cumulative wealth. (ii) After adjusting for asset pricing models, portfolio models in the High-ESG group generally produce the lowest out-of-sample risk-adjusted return per IVOL. (iii) ESG screening harms portfolio value by excluding stocks with favorable risk-return characteristics, leading to a conservative investment style, which is costly both for non-ESG-motivated and ESG-motivated investors. Our findings reveal that although ESG investment is becoming a significant trend, portfolio managers should be aware of the opportunity cost to apply ESG screening in emerging markets. [ABSTRACT FROM AUTHOR]