The Impact Of Institutional Investors On The Information Disclosure Quality Of Listed Companies

In recent years, institutional investors get rapid development and its proportion is increasing in the capital market. Also some institutional investors have been trying to "vote by hand", and as a result its part in corporate governance and the capital market will be more and more important. Full disclosure of information connects listed companies to capital market, and is the base for a creditor and minority shareholders to get enough information to make rational investment decisions. From the evaluation results of the information disclosure in ShenZhen stock exchange in the past three years, we can see that the overall quality of information disclosure of listed companies in our country is in good stage, but the excellence rate is at lower levels, revealing that the development of the capital market in our country have many deficiencies and need to be improved. Institutional investors are not only the backbone in the development of our country’s securities market, but also an important factor to improve the quality of information disclosure of listed companies. Previous research emphasize on institutional investors’stake and holding time respectively. In this paper, we will combine these two factors in order to deep into the impact of i institutional investors on the quality of information disclosure of listed companies.Securities investment funds which accounts for a big proportion of the institutional investors are most likely to act against management due to its nature of the funding source and its characteristics. It is also not easily influenced by administrative intervention and its development process is longer. It has experienced the baptism of "shady" fund, so its development is more mature. Thus this paper focuses on the impact of securities investment fund on the quality of the information disclosure of listed companies. Based on the principal-agent theory and cost-benefit theory, this paper analyzes the effect of the proportion and holding time of institutional ownership, and then put forward the method of classifying institutional investors:the sample companies were divided into two classes-high shareholding company and low shareholding companies-according to the stake. At the same time, according to whether the stake in a company is for more than two quarters, the listed companies are divided into long lines and short line institutions. Based on this classification, this paper calculated each company’s long-term institutional ownership proportion and short-term institutional ownership proportion, high and low stake in two classes were tested both in the company, in this way to verify whether all institutional investors will affect the quality of the information disclosure of listed companies, whether this influence is effected by its shareholding and holding time on earth? Whether different ownership will have different implications? What is the effect of different holding time?We use data of three years from2009to2011to verify the hypothesis proposed in this paper. Due to the existence of endogenous, we use institutional holding data of three years from2008to2010. In the end we found that if institutional investors’holding of listed companies is large and at the same time holding time is long (more than two quarters), it will have the drive and ability to influence the quality of information disclosure of listed companies, then improve the quality of the information disclosure of listed companies. But if the institutions hold a lot of non-tradable shares of listed companies while the holding time is short, it will produce certain negative effects on the listed company information disclosure quality. And if institutional ownership is small, whether long-term shareholding or short-term holding, it will not affect the information disclosure quality of listed companies. This illustrates that the institutional investor shareholding’s effect on the corporate disclosure quality mainly depends on its stake and depends on its long-term holdings and short-term holdings.The innovation points include the following two points:first, institutional investors recently "vote by hand" provide a realistic basis of institutional shareholders’participating in the internal governance of listed companies which affect disclosure decision and this paper then has a detailed analysis of the institutional investors in terms of quality of information disclosure of listed companies in our country. Second, this article will divided our sample companies into two categories, high stake and low stakes, then according to the institutional investors holding length divided institutional investors into two categories, long lines and short lines and then test the effect of institutional investors on the quality of the information disclosure of listed companies.The flaws of this paper exist in three aspects:first the research sample is relatively small. This is because this article uses the assessment index of the quality of the information disclosure of listed companies provided by ShenZhen stock exchange, so we mainly select the ShenZhen stock exchange listed companies as samples for research. Second, the control variable range is incomplete. Third, the data period has certain defects. Since the company’s information disclosure evaluation index of2012has not issued, this article selects the data from2009to2011and the data of institutional shareholdings lag issue selects the data from2008to2010. This doesn’t eliminate the effect of the2008financial crisis on the institutional ownership.