Analysis Of The Mechanism Of Institutional Investors In Corporate Governance

Being the most active principal part in the market economy , corporation is playing more and more important function . With the development of the socialization production and the separation of the corporation's owner and operator, it seems very important for protecting owner's benefits and developing corporation system to establish perfect corporation governance . Because of different practice in corporation governance and cultural traditions , it formed two different corporation governance patterns in the world-the external pattern and the internal pattern . In spite that the two patterns both took good effects in respective country , with the development of economic and the severity of competition , the two patterns inevitably showed some flaws . In the rest of 1980's , in America institutional investors did spring up corporation governance movement to overcome "the control of insider" resulted from extraordinarily separate stocks in the America stock market.Institutional investors are professional financial corporation that deal with stock investment on stock market ., In the united states by taking some measures to protect shareholders benefits and reform directors and operators unreasonable pay and strengthen the board independence , institutional investors effectively alleviated "the control of insider" and reinforced shareholder's supervision on directors and operators . After studying the America and England institutional investors participating in corporation governance , we can easily conclude that their purpose is not "replacement" but "collaboration" , they don't want to replace or weaken the operators' power , their purpose is only to pursue the collaboration between shareholders and operators and to reconsolidate the internal control system function ignored under the external control system for a long time . It is clear that institutional investors can take positive effects on corporation governance . However , it should be emphasized than only depending on institutional investors can't entirely get rid of questions on corporation governance because of some passive factors.In the eyes of history ,our corporation system developed with the reform of the state enterprise .In the process of the state enterprise reform , becauseour country owned a large number of stocks and at the same time there areshort of managing measures on state properties , our corporation governance system reveals severe "the control of insider" too . Despite there have different reasons form the America and England , it seems very necessary to study and make use of the America and England's experiences in corporation governance since the same questions . This dissertation make emphasis on this question and study what effect in our country institutional investors participate in corporation governance is .What purpose the America and England institutional investors take active in corporation governance is to strengthen shareholders' supervision on directors and operators , our institutional investors' purpose is different form it. I think that presently our institutional investors should be to strengthen the minor shareholders' restriction on the major shareholders in order to effectively alleviate "the control of insider". Without question institutional investors can bring into good effects on corporation governance . Whereas we must soberly notice that at the present time institutional investors' actions impossibly settle questions in our corporation governance at all. But we have a lot of reasons to expand institutional investors energetically in order to exert their positive effects .