Based on the empirical samples of all A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2008 to 2019, explores the relationship between institutional investor shareholding and investment efficiency. The conclusion shows that institutional investors can exert both the supervisory governance effect and the bailout governance effect at the same time, by inhibiting the over-investment of enterprises, alleviating the under-investment of enterprises, and then improving the investment efficiency of enterprises. The conclusion holds after controlling for potential endogenous effects and a range of robustness. Exploring the impact path finds that institutional investors mainly suppress corporate over-investment by reducing agency costs. Likewise, institutional investors alleviate corporate under investment mainly by easing endogenous financing. Further considering the role of the external information environment, it is found that a good information environment is more conducive to institutional investors to ease the internal financing of enterprises, reduce agency costs, and ultimately optimize the level of enterprise investment. Heterogeneity analysis shows that institutional investors have a more significant impact on enterprise investment efficiency in non-state-owned enterprises. To a certain extent, this paper expands the research on the effectiveness of institutional investors'' governance and provides a reference for better exploring the path and mechanism of institutional investors'' participation in the governance of listed companies.