Research On The Influence Mechanism Of Institutional Investor Network On Controlling Shareholders’ Private Interest Behavior

Controlling shareholders’private interest behavior is an important factor restricting the governance efficiency of listed companies.The second type of corporate governance based on controlling shareholders’ private interest behavior is also the focus and difficulty in the field of corporate governance.Especially in China,the controlling shareholders has strong control power and information advantages because they have the highest shareholding ratio,so they can obtain the private interests by occupying funds,related party transactions and other ways.But the private interest behavior seriously restricts the benign development of Chinese capital market.Taking related party transactions as an example,the number of related party transactions of Listed Companies in China has increased year by year since 2003.There have been more than 930000 related party transactions by 2020,involving a total amount of RMB 600 trillion,and the average amount of funds involved in a single related party transaction is more than RMB 600 million.How to restrain controlling shareholders’ private interest behavior is an important way to reduce agency costs and improve the efficiency of Chinese capital market.In the traditional research based on this problem,institutional investors’shareholding is regarded as an important means to curb controlling shareholder’private interest behavior,because they have advantages in capital scale,information collection and analysis ability.However,the traditional research on institutional investors implies two important assumptions.First,the transactions of institutional investors are independent,which ignores the correlation and communication between institutional investors.Second,the traditional research implies the achievement of collective action.The general method of traditional research is regarding the overall shareholding ratio as the proxy variable of institutional investors’ shareholding,which means the realization of the effectiveness of active governance must be based on the assumption that all institutional investors holding shares take concerted action.Based on the above ideas,this paper investigates the communication and interaction between institutional investors from the perspective of network,and reveals how the existence of network affects the decision-making of institutional investors,and then affects controlling shareholders’ private interest behavior.On the one hand,based on social network theory,principal-agent theory,information asymmetry theory and game theory,this paper focuses on the information transmission mechanism in the network and the impact of information on the behavior of institutional investors,explains the mechanism of the existence of institutional investor network affecting controlling shareholders’ private interest behavior from theoretical perspective,reveals the intermediate path of institutional investor network to inhibit controlling shareholders’ private interest behavior.On the other hand,this paper analyzes the inhibitory effect and inhibitory path of the institutional investors network on controlling shareholders’ private interest behavior,and analyzes how institutional investors’ clique affects the controlling shareholders’ private interest behavior by empirical models.The research confirms that:(1)the institutional investor network can inhibit the controlling shareholders’ private interest behavior.The network agglomeration degree of institutional investors is more higher and the network location of institutional investors is more closer to the network center,the inhibitory effect is more significant.(2)The influence of institutional investor network on the controlling shareholders’private interest behavior is mainly realized through information transmission and institutional investors’ collective action.And the network agglomeration degree mainly affects the private behavior mainly through institutional investors’ collective action,but the network location of institutional investors mainly through information transmission.(3)The governance level and external governance environment significantly affect the inhibitory effect of network.When the governance level of listed companies is more higher,and the external governance environment is more perfect,the inhibitory effect of institutional investor network is less significant.On the contrary,when the governance level is lower and the external governance environment is imperfect,the inhibitory effect is more significant.This means improving the governance level and the external governance environment are conducive to curb the private interest behavior of controlling shareholders.(4)The betweeness centrality and closeness centrality of institutional investors’ network also significantly affect the private interest behavior of controlling shareholders.The betweeness centrality and closeness centrality of network more higher,the inhibitory effect on the private interest behavior more significant.(5)Institutional investors’clique can inhibit controlling shareholders’ private interest behavior,because it can overcomes the free riding behavior of institutional investors promotes cooperation,in decentralized decision-making,and enhances the ability of institutional investors to restrict controlling shareholders.This paper creatively analyzes how the network of institutional investors affects controlling shareholders’ private interest behavior,and provides a new perspective and experience based on Chinese situation for solving the second type of corporate governance problems.