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Analysis Of The Micro Mechanism Between The Institutional Investors And The Stock Market

Posted on:2004-11-22Degree:DoctorType:Dissertation
Country:ChinaCandidate:L Z JiangFull Text:PDF
GTID:1116360095962775Subject:World economy
Abstract/Summary:PDF Full Text Request
The institutional investment plays an important role in the development and stability of a country's stock market. It serves not only as a component of the stock market, but also as the intermediary between the stock market and the direct investors. With a review of the development history of the stock market in the developed countries, it is clear that the institutional investment is playing more and more important roles. The investment entity in the stock market of China is developing towards institutionalization of investors. In this process, how to take advantage of the successful experience of the mature market is an urgent subject on our agenda.In this thesis, the stock pricing theory, behavioral finance theory, game theory and principal-agent theory in information economics are employed to analyze the micro mechanism between the institutional investors and the stock market from the point of view of market dealing. Chapter 2 introduces the history and significance of the institutional investors. The latent problems lying in them are also included in this chapter. The institutional investors are playing an active role in capital supply for newly-emerged enterprises, market stability, financial and system innovation, dealing system modernization and social security system reform, etc. However, they also have negative effects which lie in two aspects: the impact with their capital scale and the principal-agent problem in themselves. Chapter 3 studies rational strategies for the institutional investment and shareholder activist investment. The rational investment strategies are mainly based on Markowitz's asset portfolio theory. According to the theory, different investing styles of the institutional investors can be distinguished by different investment portfolios of the institutional investors. Among the various investing styles thus differentiated, the index portfolio investment is the most important one. Since the "vote by foot" was restricted by multiple factors, the institutional investors have been gradually increasing their use of "vote by hand", and in doing so, the key strategy is shareholder activism. As a whole, the institutional investors can boost their investment values better by shareholder activism than by dealings. As to the ways of improving the efficiency of shareholder activism of the institutional investors, internal evaluation and external control can be taken into account. In Chapter 4, the game model between the institutions, accredited investors and retail investors is established to study the relationship between the institutional investors and the stock structure of the listed company. The institutional investors play an important role in enterprise restructuring and the block-dealing market. From the model analysis we can deduce a conclusion that the enterprise supervision of some large companies is handed over to the institutional investors. Some phenomena in the US stock market are examples of our model. Chapter 5 studies the speculation strategies of institutional investment and the impact that speculation has on the market. Over response, positive feedback dealing, insider dealing and market manipulation, all of these are likely to cause price deviation from the basic market value. In this chapter, in addition to a basic introduction to DSSW noise trading model, the confidence risk is also included to expand this model because the introduction of confidence value has brought price foam into being. The institutional investors have relatively larger-scale capital. Therefore, their speculative activities have a greater impact on the market. Under certain circumstances, the speculative activities of the institutional investors are a direct force to cause the financial crisis in a country. In Chapter 6, some suggestions are made to the development of the institutional investors in China. 1: Actively guiding the institutional investors to take part in the management of the listed companies and opening up shareholder act...
Keywords/Search Tags:institutional investor, stock market, speculation, shareholder activism
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