Research On The Influence Of Index Flund Shareholding On Governance Structure And Performance Of Listed Companies

The study of institutional investors in China's stock market has been there for far too long.With the evolution and development of the variety and aim of institutional investors,a growing number of studies have attempted to classify institutional investors to explore the behavior of one particular kind of institutional investors and its effect on investment object and the investing market.This paper attempts to study how Index Fund,the special investment of institutional investors,influences the governance structure and performance of investee companies and which related indicators are affected.In the traditional theory,Index Fund is considered to be "lazy investors" and its investment tracking index and attempts to get the normal rate of return in the market.Recently,in the capital market of developed countries,such as the United States,both scholars and fund managers hold the view that Index Fund no longer a simple tracking index that ignores management to its investee companies.Instead,it has a proactive impact on governance and management of the investee companies.With the development of the Index Fund in the capital market in China,more and more facts suggests that it may be involved in corporate governance and affect company performance.In 2008,Eastern Airlines intend to issue shares to Singapore Airlines and other qualified investors.Shareholder Harvest CSI 300 Index Fund joint to Rongtong Fund clearly expressed opposition to the resolution.Finally the general meeting of shareholders rejected the matter.We select data in China's stock market from June 2010 to June 2016,choosing 50 stocks in the bottom ranking of the CSI 300 and 50 stocks in the top ranking of the CSI 500 Index in each period as samples,and selecting the dummy variable index,"whether stocks be included in the CSI 500 Index",as instrumental variable in order to study the effects on public companies while they sharehold Index Fund.While selecting instrumental variable,we consider the following aspects:(1)Stocks are included in specific index,under the influence of index making and reset rules rather than the influence of specific administration and management of market and company.(2)The cohesive relation between the CSI 300 and the CSI 500 Index makes "stocks are included in the CSI 500 Index" related to the proportion of Index Fund.Through alternative of instrumental variable and regression of panel data,we believe that Index Fund shareholding has a positive impact on governance structure of public companies,mainly in promoting protection for interest of minority shareholders.In the aspect of performance,due to difference in fields and managing cycle of different companies,it may be difficult for Index Fund to fully grasp the company's specific performance indicators and pose a positive impact on its performance,with just a few of the main financial indicators,including profit norm,assets liability ratio,current ratio and so on,influencing the listed companies'business.While discussing on whether shareholding Index Fund would influence the salary of directors,supervisors and senior management groups,we select the overall salary and its subclass as research object and find that salary will not be affected by changes in Index Fund shares.We analyze the possible reasons ulteriorly from qualitative perspective,including:(1)Index Fund participates in the company's governance and management through the way of acting stock rights.(2)Index Fund itself makes no difference in governance and performance of public companies,shareholding being a message to other investors which contribute to their investment and management.(3)Managers of Index Fund influence managers of public companies in a certain way to improve the value of Index Fund.