Influence Of Controlling Shareholders Nature And Institutional Investors On Corporate Financing Constraints

Financing is one of the key financial behavior in a enterprise, financing capabilities directly determine whether a enterprise can have sufficient funding, affecting the results of operations and even the survival and development of enterprises. Corporate finance include internal financing and external financing: internal financing rely on internal cash flow, it is often limited, and is determined by the financial condition of the enterprise; external financing obtain funds from the capital market, however, information asymmetries and principal-agent problem in the capital market will bring the costs of information searching and monitoring, so the external financing will higher than internal financing, that is called external financing constraints.Adequate funding is the basic guarantee for the development of enterprises, external financing constraints lead to the enterprise can not raise the necessary funds for the earnings investment, so the investment is likely to be abandoned and the development of enterprise is constrained. Therefore, there is important significance to reduce the financing constraints on the investment decision of enterprises, business performance and long-term development, And to it, must be to reduce the degree of information asymmetry and agency cost.Many foreign researchers show that, with the development and becoming more mature of the institutional investors, it has become one of the main ways of information asymmetry and agency cost reduction.But compared with the nearly one hundred years development in developed countries, the institutional investors in our country has just started, and still not mature enough. So can institutional investors in our country play like the developed countries to improve corporate governance and reduce the financing constraints?Moreover, at present in China, reform is at a critical stage, the construction of market economy is still in progress, The state-owned enterprises is in persistent reform, and In general, the capital market is not developed enough. Because of the historical and current reasons, the controlling shareholder of China’s listing Corporation the most is state-owned properties, and the ownership structure is concentrated, the government will intervene its management, and provide financial support. In this special economic background, What is the difference between financing constraints faced by state-owned and non state-owned listing Corporation? Can Institutional investors also play the role of the above?Based on the above analysis, the main purpose of this paper is studying the relationship between the nature of the listing Corporation controlling shareholders, institutional investors and corporate financing constraints in China’s capital market, and mainly around the three questions:what is the impact of controlling shareholders nature of listing Corporation on corporate financing constraints? What is the impact of institutional investors on corporate financing constraints? And is the impacting same in the state-owned and non state-owned listing Corporation?In order to study the present situation of the above problem, the paper summarize the present related research from four aspects:influence of the controlling shareholders nature on financing constraints, influence of institutional investors on Corporate Governance, and influence of the controlling shareholders nature on institutional investors’governance effect.In order to answer the three question, based on relevance theory, the paper analyze the relationship between the three and propose research hypothesis. Then the paper use the financing constraints model proposed by Almeida(2004), Select2009-2011A shares listing Corporation as the sample, including186state-controlled listing Corporation and366non state-owned listing Corporation,to carry on the empirical research, and eventually reached the following conclusions:(1)financing constraints faced by state-owned listing Corporation was significantly higher than that of non state-owned listing Corporation in china.(2)Institutional investors can significantly reduce the financing constraints of listing Corporation.(3) Institutional investors’ role of reducing financing constraints in non state-owned listing Corporation is more obvious than state-owned listing Corporation.(4) The result of this study shows that institutional investors have been able to play a certain role in China securities market, and that depend on the corporate governance environment.In order to make the institutional investors play a better role to reduce listing Corporation financing constraints, need to improve the following aspects:The state-owned listing Corporation has to clear the relationship between government and enterprise and reduce intervention in business of government; Non state-owned listing Corporation must constantly improve the internal control environment, in order to attract institutional investors to improve corporate governance and financing ability; Institutional investors also should improve their own governance and investment professional level; The securities regulatory authorities should continue to improve relevant laws and regulations, and create a favorable external environment for institutional investors to participate in corporate governance.The above conclusion have a certain significance, it can rich and supplement the theoretical study of related fields, as well as offer help to the listing Corporation in China to make financing decision and to improve policy of institutional investors development.