The Impact Of Institutional Investor Heterogeneity On The Risk Of Stock Price Collapse

The healthy and stable development of the stock market plays a crucial role in the economic system.As a "barometer" reflecting the economic trend,if the stock price falls sharply,it will have a certain blow to the whole economic system.This paper mainly studies the impact of institutional investors on the risk of stock price collapse,and what role short selling mechanism will play in that relationship after China’s opening pilot of margin trading.Firstly,this paper summarizes the relevant literature at home and abroad.Secondly,it combs the causes of stock price collapse through the information hoarding hypothesis,explores whether the institutional investors will carry out effective supervision.Based on the above analysis and China’s market background,this paper puts forward the hypothesis.Finally,using the empirical analysis method,this paper selects the listed companies on China’s A-share main board from 2010 to2020 for research.After a series of data processing,a total of 10820 observations of1746 companies are obtained and substituted into the model for regression analysis.This paper draws the following conclusions.First,China’s institutional investors did not play the role of effective supervision,and they exacerbated the volatility of the market.Second,stable institutional investors value long-term investment,which can curb the risk of stock price collapse.Trading institutional investors have a short shareholding period.They can increase the risk of stock price collapse.Third,after the restrictions on short selling in the market are lifted,it provides investors with a more open trading platform,so that the stock price contains more information,buffers the optimistic expectations of the market,and achieves the role of stabilizing the market,which is reflected in enhancing the positive role of stable institutional investors in the market and weakening the negative role of trading institutional investors in the market.Fourth,further study the extent of the company’s securities lending trading volume as short selling,and find that the higher the degree of implementation of the short selling mechanism,the stronger the effect on maintaining market stability.The research of this paper has theoretical significance.Most of the existing literature consider the relationship between the above factors alone,and rarely study the three together.This paper also provides some suggestions for market participants,such as advocating that companies vigorously introduce stable institutional investors,and regulators can require institutional investors to actively supervise investment companies.Finally,regulators should further liberalize the margin trading system,stimulate market vitality and improve market efficiency.