Shareholding By Qualified Foreign Institutional Investors And Corporate Irregularities

In the background of listed companies’ repeated violations,all sectors of society are constantly seeking effective ways to prevent and manage corporate violations.Under the guidance of the strategy of "ultra normal development of institutional investors",institutional investors including qualified foreign institutional investors(QFII)have become an important external force to improve corporate governance structure.Since the introduction of QFII in China in 2003,the investment in China’s capital market has increased significantly.By 2022,nearly 740 institutions have been approved for QFII qualification.By January 31,2023,China has approved a total of$182.729 billion for QFII investment.With the removal of QFII investment quota restrictions and the further improvement of China’s QFII policy,more QFII investment will enter China’s capital market and have a series of economic impacts.However,few scholars have paid much attention to the impact of QFII shareholding on the irregularities of Chinese listed companies.Based on this,this paper examines the relationship and mechanism between QFII shareholding and corporate violations from the micro perspective of QFII system.This paper uses the empirical research method,takes A-share listed companies from 2012 to 2021 as the research object,and uses the Logit model to empirically test the relationship between QFII holdings and corporate violations,as well as the mediating role of two types of agency costs and analysts’ attention between QFII and corporate violations,and further tests the impact of QFII on different types of violations.The effects on companies with different property rights and different sizes are different,as well as the moderating effects of ownership concentration between QFII and corporate violations.The results show that:(1)QFII shareholding can significantly inhibit corporate violations.(2)QFII can reduce corporate violations by reducing the two types of agency costs and increasing analyst attention.(3)QFII has a significant inhibitory effect on different types of corporate violations.(4)QFII can play a significant role in the governance of violations for companies with different property rights.(5)QFII can significantly inhibit violations of large-scale companies,but it does not play a significant role in controlling violations of small-scale companies.(6)Ownership concentration has a significant positive moderating effect on the relationship between QFII holdings and corporate violations,that is,the higher ownership concentration is,the more helpful QFII will be in managing corporate violations.The contributions of this paper are mainly reflected in the following aspects:(1)From the perspective of QFII,this paper studies the relationship between QFII shareholding and corporate violations,and expands the research on the influencing factors of corporate violations and the effect of QFII shareholding.(2)Based on the economic background of China,it examines the impact of QFII,as an important part of institutional investors,on corporate violations and its action path,which deepens the understanding of market players on the role of QFII,and helps to provide micro-level theoretical support for continuously increasing the introduction of QFII.To provide feasible ideas for relevant departments and listed companies to deal with the problem of corporate violations.