Institutional Investors, Stock Equity Structure And Corporate Governance

The focus of modern western theory is how to diminish the transaction cost or cost of agency between owners, managers and debt holders through the corporate internal organisation structure and system, however, it ignores how the internal structure of owners influences the corporate governance and corporate performance. On the other hand, the stock equity restructuring of Chinese state-owned enterprise reveal a lot of questions which has strong relationship with vacancy of ownership in state-owned enterprise and the irrationality of the stock equity structure. So to figure out how to fill the vacancy of ownership, optimise the stock equity structure and improve the corporate governance become very significant for the state-owned enterprises reform.Chapter one deals with the foreign and domestic research results and the research trend of corporate governance, basing on which I present out my research topic and its significance. Chapter two,from both the mechanism and the international mode, gets the result that the stock equity structures of every country is optimizing, trying to reach the state that the minority stockholders collusively take the control, i.e. competitive equity structure. Chapter three, points out the shortcomings of the present corporate governance of our state-owned enterprises, standing out the irrationality of equity structure is the key reason of the present bad corporate governance. Through both the canonical analysis and the empirical test on the monopoly stock equity structure, oligopoly stock equity structure, complete competition stock equity structure and competitive stock equity structure, it concludes that competitive stock equity structure is advantageous to corporate governance. So in the process of constructing the competitive equity structure, downsizing the state-owned equity and reestablishing the main owner would be the keys of the state-owned enterprises reform. Chapter four proves that institutional investors can be active investors by their impulse and efficiency in the corporate governance, and play an active role in corporate governance, and the main role of downsizing state-owned stock equity andreform stock equity structures of the state-owned enterprises.From the research of this topic, I think the present corporate governance situation can be improved by introducing the institutional investors and establishing the competitive equity structure. So the government should relax the systematic restraint on the entry into the market of institutional investors, eliminate every systematic defects, establish the benign systematic environment, let the institutional investor play a positive role in the corporate governance.