A Study On The Relationship Between Institutional Investor’s Shareholding And The Performance Of Listed Companies

In the 1980s, Western countries’institutional investors came to realize that the cost of "vote with their feet" is too big, began to change from passive management to active management, institutional shareholder activism gradually rise. Compared with individual investors, institutional investors have the advantage of personnel, capital and information, can overcome minority shareholders’ shortage of incentives, also ease the control deficiencies brings by the major shareholders and "internal", improve corporate governance. Learn from the experience of the international market, the Chinese government hopes to change the ownership structure of the capital market and guide the investment behavior of capital markets by developing institutional investors. As a result, Chinese government has promulgated a series of policies and regulations. Since 2006, Chinese institutional investors has been entered the stage of rapid development, formed a diversified situation dominated by securities investment funds, social security funds, insurance companies, QFII, securities companies and other institutional investors common development. With the continuous development of institutional investors, it will have an important impact on Chinese corporate governance and business performance.Based on double principal generation theory, cost-benefit theory and corporate governance theory, this paper try to study the influence of institutional investors on corporate performance from the perspective of institutional activism.In the study, the proportion level of institutional investors holding, the type of institutional investors and the company’s property right is considered. This paper selects the motherboard A-share listed companies in Shanghai and Shenzhen Stock Exchange as samples, the data of institutional investors from 2009 to 2012 and business performance from 2010 to 2013. The empirical results show that:the institutional investors can be able to improve business performance in some extent, but only at a higher stake they could improve business performance. After the classification of institutional investors we found that only the fund and QFII played a positive role to enhance business performance. Besides, state-controlled weaken the positive role of institutional investors on the effectiveness of business performance. This study provided a theoretical basis and empirical evidence for us to further understanding the behavior and the ability to govern of institutional investors.