A Research On The Influences Of Funds Shares Behavior On Corporation Performance Of Listed Companies

Since the 1980s, securities investment funds by using their professional analytical capacity, rational investment behavior, as well as the cost superiority of scale economy gained rapid development and have become one of the most active investment forces in financial markets in Anglo-American and other Western major developed countries. Moreover, with their strength growing securities investment funds are not quite satisfactory for their pure investor position. And they'd like to work conjunction with other institutional investors to actively participate in corporate governance, hoping to seek greater self-interest by improving corporate performance. Thus, the research on the influences of funds shares behavior mode on corporation performance of listed companies are, to some extent, actually exploring whether the fund will play a special role in corporate governance structure and improve business performance consequently, which is beneficial to the development of securities investment funds and perfection of corporate governance structure doubtlessly. It has a very important theoretical and practical significance.Firstly this article reviews the researches of predecessors on related subject. Then we discuss the influences of funds shares behavior on corporation performance of listed companies from a theoretical point and build a corresponding theoretical model to explore the probable changes of the overall performance due to the funds' holdings. This paper empirically analyzes the influences of funds shares behavior mode on corporation performance mode with panel data of listed companies in a stock market between 2005 and 2008 from three aspects, which are consisted of the motive of participating in the governance, balance-forming ability and stock-holding preference. Main results reveal that the performance of companies with funds holdings is better than the ones without it. Along with the scale enlargement of stockholding, it provides the motive of participation in management and countervailing power versus the largest shareholders for funds, which can effectively alleviate the issues such as "internal monitoring" and unreasonable share equity structure. And this will increase the whole outstanding achievements of the companies. Meanwhile, the value of those listed companies who are in funds' graces will also be significantly improved. Empirical results indicate that funds shares behavior indeed contributes to the integrate performance of corporations. Finally, on the basis of the empirical research and literature, this paper suggests the focus of future policies should be involved in creating favorable external environment, regulating the development of funds industry and encouraging shareholders to play an active role.