The Research On The Function Of Institutional Investor On M&A Performance

As the growing of Institutional Investor, they play a more and more important rolein Capital Market. The development of domestic market and improvement of rules andregulations provide important guarantees for Institutional Investor to make a difference.But what role Institutional Investor played in M&A? Will they improve the performanceof merger and acquisition? For the above questions, there is no uniform research indomestic literature, meanwhile differences in study environment also determine that theforeign relative researches lack of reference value in solving these problems. This paperwill try to make M&A, the external governance mechanism of corporation, as cuttingpoint to analyze the function of Institutional Investor on M&A Performance. On thisbasis, this paper will enrich and perfect the related research on the function ofInstitutional Investor on corporation governance, and help to recognition the roleInstitutional Investor played in Capital Market.On basis of literature review, we put forward the research assumption under thebackground of principal-agent theory, stakeholder theory and corporate governancetheory. To verify our hypothesis, we select listed companies involved in M&A activityduring the period of2009and2010as samples, and build regression model as well. Inselection of explaining variables, this paper introduces three experimental variableswhich exerting effect on the function of Institutional Investor to measure the influenceInstitutional Investor exerts on the performance of merger and acquisition.Through analysis we draw these conclusions as following: the performance ofmerger and acquisition will increase as Institutional Investor increase the motivation tosupervise management and the counterbalance to the first majority shareholder; theperformance of merger and acquisition will decrease as the conflict of interest betweenInstitutional Investor and other stakeholders. Our research results accords with ourresearch assumption：Institutional Investor exerts an influence on the performance ofmerger and acquisition.