Study On The Effect Of Institutional Investors On The Performance Of Company Merger

By the policy support in theextraordinary development of institutional investors, the number of institutional investors, investment size and ownership shareundergone huge growth.The institutional investors gradually become a major force in the capital market of China. In 2003, China formulated and promulgated the QFII system policy, to encouragequalified foreign institutional investors to enter the market. The purpose is to guide institutional investors in our country gradually to change into the value of the investment, and to promote the healthy and stable development of China’s capital market. With the widespread rise of shareholder activism, some institutional investors have gradually recognized that only the internal governance is involved in the investment company, the implementation of effective external supervision for the management of the company, they can obtain the long-term economic interests. There are a large number of studies indicate that the presence of institutional investors have positive effect on the performance of listing Corporation. In recent years, China enterprise’s M&A events are raging like a storm. There are many reasons in M&A, including coordination effect, the principal-agent problem, market expansion and diversification. The enterprise merger and acquisition activity is an important part of corporate governance, so will institutional investors be the performance of M&A of the investment of the M&A company to produce positive effect? Then the enterprise merger and acquisition activity is an important part of corporate governance. So whether institutional investors will have a positive effect on the performance of the company’s M&A? Effect of different institutional investors on the performance of mergers and acquisitions are the same? From the angle of enterprise M&A performance, this paper studies the impact of institutional investors on the investment performance of mergers and acquisitions by listing Corporation, in order to explore the influence of institutional investors’ new evidence of corporate governance.Firstly, this paper detailed combed the domestic and foreign literature, including institutional investors and corporate governance, the relationship between the performance of mergers and acquisitions research methods and institutional investors on the performance of the company merger and acquisition effect etc. And then make the definition of institutional investors, corporate merger and acquisition performance. Based on the theory of principal agent, acquisition motivation theory and shareholder activism this paper carries on the theoretical analysis and puts forward the research hypothesis. The study object of this paper is the listing corporation which had M&A activity in the period from 2009 to 2013. Finally do descriptive statistics, correlation test and linear regression analysis of the data using SPSS 19.0 software, and summarize the conclusions of this article:(1)There was a significant positive correlation between the performance of M&A of the overall Investment Company and institutional investor shareholding ratio. The higher the proportion of institutional investors holding, then the company M&A performance better.(2)When the institutional investors’ shareholding ratio is higher than 10%, institutional investors will have a significant positive impact on the performance of M&A of the company. But when the shareholding ratio is lower than 10%, the influence of institutional ownership on M&A performance is less significant. The results of the study show that the shareholders holding over 10% institutional shareholders have stronger motivation and the ability to play the supervision and governance effect.(3)The higher the independent institutional ownership ratio, the better the performance of mergers and acquisitions of companies is. But the correlation between the performance of M&A of corporate and the ownership ratio of non-independent institutions is not significant. Independent institutional investors tend to intervene in the objective and rational M&A behavior of management, urges the M&A performance improvement.