Institutional Investors’ Governance Role

Since the1980s, with the rapid development of capital markets, institutional investors in developed countries actively take part in shareholder activism, and institutional investors have become one of the main development trend of international securities market. In order to promote the rapid growth of Chinese securities market, the securities and futures commission vigorously develop normatively institutional investors as an important part of strengthening the construction of the securities market. In the guidance of the strategy of "extraordinary development of institutional investors", the institutional investors in China developed rapidly which changes increasingly into a major investor in Chinese capital market, preliminarily formed the pattern of coordinated development of all kinds of institutional investors. With the expansion of institutional investors’shares and the transformation of investment perception, the institutional investors are more and more initiatively and frequently to participate corporate governance, the experts haven’t reached a consistent conclusion whether there is enough motivation and ability for institutional investors to participate in company external governance and the role of effective supervision is still an important subject worth exploring.This article is based on3354listed companies as research samples which form the Shanghai and Shenzhen A shares in2010to2012years. From the excessive investment perspective identify the different institutional investors in corporate governance performance of different roles. The results show that in these three years, the most A-share listed companies had inefficient investment behavior and the severity of excessive investment is much greater than the lack of investment. The total institutional investor shareholding proportion, long-term institutional investors holding and independent institutional investors holding ratio are significantly negative correlation with over-investment, shows that high stake, holding period is long, independent institutional investors can inhibit over-investment level who have played an important role in effective supervision in corporate governance and play a better governance effect. By contrast, short-term institutional investors holding significant positive correlation with over-investment, the independent institutional investor shareholding and over investment regression coefficient is positive, but they haven’t pass the test of significance of10%, which shows these institutional investors in corporate governance role is not obvious, even to a certain play an extent grabbers role of interest. Finally for study of this article conclusion, suggestions of guiding and standardizing the policy for the development of institutional investors:From the aspects of optimization of external governance environment, improve the system of capital market foundation and strengthen the regulation of institutional investors to relax the restrictions on institutional investors into the market shares, and formulate relevant laws and regulations so that can promote coordinated development of institutional investors diversity; From self-management level, we should improve the governance structure of institutional investors themselves, give the guidance to institutional investors in establishing a long-term investment strategy, to participate in the governance of listed companies actively, and play the role of effective supervision.