Equity concentration and investment efficiency of energy companies in China: Evidence based on the shock of deregulation of QFIIs

Highlights: • First, the exogenous reduction of equity concentration is not conducive to energy companies' grasp of investment opportunities. • Second, high equity concentration improves the investment efficiency of energy companies. • Third, equity concentration affects the investment efficiency by influencing the first type of agency cost and the information environment. • Four, due to the internal decision-making power and the external environment, the relationship between equity concentration and energy companies' investment efficiency is different. This paper empirically tests the impact of equity concentration on the investment efficiency of Chinese energy companies based on the shock that the shareholding ratio restriction of qualified foreign institutional investors (QFIIs) is relaxed. We find that equity concentration significantly improves energy companies' investment efficiency in China. Equity concentration affects the investment efficiency by influencing the first type of agency cost and the information environment. Equity concentration plays a significant role in improving the investment efficiency when the decision-making power is decentralized while the external environment is complex.