The Empirical Research About The Impact Of The Institutional Investors On The Performance Of Listed Companies

One important indicator of capital market development maturity is the level of development in the market for institutional investors. Institutional investors in developed countries has become an important force in maintaining long-term stability of the developed capital markets and market participants as important for improving the performance of listed companies made a very big contribution.In recent years, with the increase of government support, making the development of institutional investors also received a very big step forward, especially after the implementation of a series of institutional reforms, the proportion of shares in the stock market and institutional investors have steadily increased.Instead of retail investors, institutional investors are gradually becoming a major force in the stock market. The practice of western developed countries, shows that when the ratio of institutional investors to a certain extent, it can exert a positive impact on listed companies, in order to promote the upgrading of the performance of listed companies. They wants to actively participate in the governance of listed companies, in order to safeguard their own interests, and hope to get a long-term return on investment willingness have gradually emerged.In general, institutional investors can energetically participate in the ownership of corporate governance to enhance corporate governance and to improve corporate performance. This article is intended for discussing and analysising the positive impact of institutional investors on corporate governance, thus affects the company’s performance, and thus provides theoretical support for the further development of institutional investors.In this paper, article is divided into six chapters; the main contents are as follows: Chapter1IntroductionThis chapter first describes the background, from both theoretical and practical aspects illustrates the significance of the study, followed by the introduction of the two methods used by the Institute, and finally illustrates the overall research ideas and briefly outlined the framework of the study. Chapter2Literature ReviewThe chapter is divided into two parts at home and abroad, and the correlation between the performance of institutional investors and listed companies were reviewed and monitoring hypothesis of efficiency, conflict of interest hypothesis and the hypothesis that the three aspects of the strategic alliance literature were summarized. Chapter3Theoretical AnalysisFirstly the chapter is mainly described and analyzed the basic concept of institutional investors and corporate performance and corporate governance, institutional investors’characteristics, type and development process. Second, analysize the theoretical foundation of impact between corporate performance and institutional investors, finally, the way how the institutional investors affect corporate governance were analyzed, laid the theoretical foundation for the empirical analysis that follows. Chapter4and5Empirical Studies and ResultsOn the basis of the previous theoretical analysis, Chapter4proposed the following four hypotheses:(1) Institutional investors will help improve listed companys’corporate governance and its stake positively correlated with the next corporate governance performance;(2) By joining corporate governance, they enhance corporate governance, in order to improve the company’s performance level that was positively correlated with its stake of the company to the next level of performance;(3) Institutional investors balance positively correlate with the next level performance of the company;(4) Institutional investors can effectively improve the market value of listed companies, listed companies to increase market acceptance It also describes the study variables, the research model. Chapter5use the listed company data and the fourth chapters’s model assumptions to make empirical testing and analysis. Chapter6Conclusions, Recommendations and Ideas for ImprovementThe chapter firstly summarizes the research conclusion, followed by recommendations for the blossom of institutional investors; finally, proposed directions for further research in this article. In the empirical research, this paper drew on experience from previous studies from shareholding structure, board governance, managers governance, information disclosure and legal basis to build a corporate governance index (CGI) to measure the performance of corporate governance, and use earnings per share (EPS), return on assets (ROA) as a measure of performance of the Public Company Accounting and use Tobin’Q to measure the market value of listed companies, use the natural logarithm of period-end total assets (LNASSET), asset-liability ratio (LEV) and revenue growth (GROWTH), respectively, to measure company size, capital structure and growth, and as the assumption of control variables. This study sample is the listed companies in Shanghai and Shenzhen A-share holdings of institutions from2010to2012, using principal component analysis and multiple regression analysis, empirical test results are as follows:(1) Institutional investors will help improve listed companys’corporate governance and its stake positively correlated with the next issue of corporate governance performance, indicating that institutional investors have a facilitating role on corporate governance performance.(2) Institutional investors taking part in corporate governance to enhance corporate governance and improve the company’s performance level that was positively correlated with its stake of the company to the next level of performance, indicating that institutional investors on corporate governance improvements are reflected in the final company’s performance, that is to say, the proportion of them determine the performance of listed companies.(3) Institutional investors balance positively correlates with the next level of performance of the company.In this paper, we make the institutional investors balance degree (INZ) and lag phase of the listed company performance indicators (EPS and ROA) multiple regression analysis that indicated that between them, has a significant correlation, that institutional investors have a vigorous function for improving the ownership structure of listed companies, balancing the interests of major shareholders to improve corporate performance.(4) Institutional investors take part in corporate governance to heighten the standard of corporate governance and heighten the company’s market value, the paper make the proportion of institutional investors and lagged indicators of the market value of listed companies (Tobin’Q) regression analysis that showed that there was a significant positive correlation between the two, that is to say, after holding the shareholdings in listed companies, the institutional investors will actively participate in institutional governance, promote the improvement of corporate governance standards, affecting the capital markets, and ultimately enable the company to obtain a better market acceptance.In this paper, related to the proposed development of institutional investors, we mainly put forward three proposals:(1) Strengthen the regulatory system and improve institutional investor stake limit;(2) Comprehensively and coordinately improve the institutional investors, promote diversified development;(3) Actively guide institutional investors in corporate governance.In general, in order to guide institutional investors to increase the enthusiasm of governance of listed companies and listed companies to promote performance improvement, institutional investors should be given a more ample legal and market environment.The main contributions of the paper are as follows:(1)In the study of topics related with this article, the study is more comprehensive and more reasonable.The research object of this article is all institutional investors in the top10shareholders of listed companies, to make the object of this paper more planes. In order to distinguish what is the institutional investors’ impact of the company’s performance or the performance impact of institutional investors, the company performance variables use the lag one period of treatment, and then return with institutional investors, so that the empirical results will be more reasonable.(2)By calculating the corporate governance index (CGI) to measure the performance of the corporate governance of listed companies.In this paper, the calculation of CGI is using the principal component analysis method to part of the representative indicators of Nankai University corporate governance index for empirical research, which overcome the subjectivity. By calculating the corporate governance index (CGI) to measure the performance of the corporate governance of listed companies, the multiple regression analysis method demonstrates the influence of institutional investors on corporate governance performance.The further thought about this paper is:(1)When measure the quality of corporate governance, we use11indicators, for example, the largest shareholder proportion, using principal component analysis get the corporate governance index CGI, these indicators to measure the quality of corporate governance has a role, but not comprehensive, if we can adopt a more comprehensive measure to the quality of corporate governance system, our research findings will be more convincing, the results are higher reliability;(2)Institutional investors related to the eight categories, every institutions’ investment styles and means of each class of institutional investors are probably not the same, most of the this research paper is not distinguish between all the agencies, so the results perhaps are not more comprehensive and detailed, the future can also do research on different data classification institutional investors, may also be against the QFII, against the insurance company. This classification developed the results of research that we have a concrete grasp of different institutional investors’investment style, but also facilitate the management to develop appropriate rules and regulations to regulate the investment behavior and to encourage them to perform better in favor of a listed company’s long-term development of effective supervision;(3)There are many factors that will affect the company’s performance, the paper adopt just firm size, asset-liability ratio, the actual control of listed companies on the type and capacity of the company’s growth as the four variables were controlled regression, considering not comprehensive enough.