Research On The Influence Of Institutional Investor's Stock Ownership On Equity Financing Cost Based On Corporate Governance Theory

Institutional investors were born in the United Kingdom in the 1860 s.They began to rise and develop rapidly in western countries in the 1980 s.At present,they play an important role in the securities markets of western countries.Many scholars' theoretical studies and factual cases show that western institutional investors have gradually changed from "voting with feet" to "voting with hands",successfully playing an active role in corporate governance.The development of institutional investors in China is relatively late,but with the relaxation of national policies,securities investment funds,insurance,pension funds,QFII,social security funds,etc.,have entered the market one after another.At present,China's institutional investors have formed a diversified development pattern.After the implementation of the new asset management regulations,the establishment of wealth management subsidiaries and the reform of the pension security system further promoted the development of institutional investors.Starting in 2019,the MSCI and Russell indices have successively adopted A-shares as the inclusion factor and successively increased the proportion of the inclusion factor,indicating that the development of China's A-share market has become more mature,creating a favorable environment for institutional investors to play a positive role in corporate governance.Equity financing cost is an important criterion for companies to choose financing methods and investment decisions.It also plays an important role in capital market capital flow and resource allocation.Therefore,this article will explore the impact of institutional investors on equity financing costs based on corporate governance theory.This paper studies the corporate governance role of institutional investors from two aspects: external supervision and internal governance.In view of the heterogeneity of institutional investors,not all institutional investors have the willingness and ability to participate in corporate governance,this paper divides institutional investors into four categories according to the criteria of independence and robustness,and discusses their effects on equity financing costs.Considering the characteristic property right system in China,this paper divided the sample data into state-owned enterprises and non-state-owned enterprises for comparative analysis to investigate the different impacts of institutional investors on costs of equity capital.This article selects the A-share listed companies in China from 2015 to 2018 as the sample to conduct a full sample and sub-sample empirical research,and finally draws the following conclusions:(1)The higher the shareholding ratio of institutional investors,the lower the cost of equity financing.(2)Compared with non-independent institutional investors,independent institutional investors can give more play to the effect of corporate governance and effectively reduce the cost of equity financing.(3)Compared with transactional institutional investors,stable institutional investors have more incentives and advantages to participate in the external supervision and internal governance of the company,thus reducing the cost of equity financing.(4)In non-stateowned enterprises,the corporate governance role played by institutional investors is even more significant.