The Study Of Legal Regulation About Institutional Investors Participate In Listed Corporate Governance

Along with the advancement of shareholder activism, enthusiasm of institutional investors to participate in the governance of listed companies has been improved greatly. In 2000, Franklin Allen, a Wharton professor of the University of Pennsylvania, in its inaugural speech of The Institute of Financial presidency which in the title of "DO Financial Institutions Matter", mentioned that we should concern about the impact to financial markets with the institutionalization of investment subjects. The development of institutional investors indeed playing a role in supervision for the governance of listed companies. For example, institutional investors can optimize the allocation of resources and reduce the cost of supervision of listed companies and ease the principal-agent problem, promote the improvement of corporate governance structure and rules.However, consider to the nature of institutional investors is a financial investor, they pay more attention to short-term investments. This feature has some conflict with the long-term development of listed companies. For example, Institutional investors may cannot get along well with managers, or sell major assets of listed companies, expand the company’s debt for their own profits and so on.Depending on the investment strategy, institutional investors can be divided into sound-based institutional investors and transaction-based institutional investors. Depending on the length of the holding period, institutional investors can be divided into strategic investors and financial institutions based institutional investors. The author discussed in the text of the legal regulation of institutional investors mainly but not exclusively for financial institutional investors and transactional institutional investors. The reason for focusing on financial institutional investors and transactional institutional investors because of their tendency to be more serious, more likely to harm the company’s interests.Before the 1980 s, institutional investors generally negative to involve in the governance of listed companies, vote with their feet, and later due to the change in US policy and the gradual liberalization of the value concept, institutional investors have begun to actively participate in governance of listed companies, with hand vote. There are two different academic perspectives on institutional investors to participate in governance of listed companies, namely the doctrine of affirmation and doubt doctrine. Doctrine of affirmation think that Institutional Shareholder Activism can play a catalytic role in the development of listed companies, and doubt doctrine think that. institutional shareholder activism do not promote the development of listed companies and even have negative. The author think that on the other hand should encouraged institutional investors to participate in corporate governance, on the other hand should regulate short-term investment behavior of institutional investors, so that the interests of institutional investors can fit in with listed company’s long-term interests.To encourage institutional investors to participate in corporate governance of listed companies may bring some benefits, such as increased operating income of listed companies. Because institutional investors holding plenty of shares, so if institutional investors in listed company supervision, earnings of supervision can cover the cost of supervision, thereby reducing the cost rate. while institutional investors with professional advantages, it is possible to improve the efficiency of supervision. Principal-agent problem can be effectively mitigated by institutional shareholder activism, and to improve the governance structure of listed companies selected by independent directors and other means.Finally, the author in the four angles improving the legal regulation of corporate governance: set shares lock-up period, the implementation of major issues classified voting mechanism, strengthen information disclosure obligations and fiduciary duties of institutional investors. We want through shares lock-up period to promote the long-term shareholders in listed companies. The proposal fell within the scope of the major issues of listed companies to classify vote can constrain institutional investors for short-term interests and harm the interests of listed companies, such as stop institutional investors sell the company’s property for short-term profit, thereby protecting the interests of small investors. Strengthening fiduciary duty of institutional investors in listed companies require them reasonable exercise of shareholder rights, effectively preventing its abuse shareholders’ rights. Strengthening disclosure obligations of institutional investors in listed company information can promote rational, reasonable institutional investors exercise of shareholder rights rational and reasonable, and can easily stakeholders to monitor the actions of institutional investors.