An Empirical Study On The Relationship Among Institutional Investors, Investor Protection And Corporate Performance

In the Economic transformation of China, there are many problems in our corporate governance. The supervision authorities of securities market hope institutional investors can effectively solve the principal-agent problems of corporate governance in our listed companies. The study of this topic is with theoretical and practical values.Based on the summary of research documents of institutional investors participating in corporate governance, this paper, using the 2007-2009 listed company samples in Shanghai and Shenzhen Stock Exchange markets, exams the effect of the institutional investors participating in corporate governance.The objectives of our study focus on the answers to three issues: (1)whether or not the institutional investors have the influence on internal investor protection and performance of the company? (2)whether or not there are differences from institutional investors functions in different internal governance environment? (3)how do the institutional investors participate in the corporate governance?After the systemic investigations, the main findings of this paper are as follow:First, after holding a large number of shares of listed companies, institutional investors have the power and ability to monitor the actions of the companies. Institutional investors can enhance the listed company's internal investor protection executive level, enable shareholders and directors to regulate their behavior, reduce the agency problems caused by large shareholders tunneling and directors control.Second, institutional investors play a significant role in promoting the performance of listed companies. Especially, when investor protection executive level is higher, the institutional investors can play a greater role in its supervision and governance, and finally make greater increase of the performance.Third, institutional shareholder activism acts positive influence on the performance by reducing the behavior of large shareholders tunneling and insider directors control. Meanwhile, the higher investor protection executive level can also inhibit these behaves, with the intention of protecting the small investors.