Research On Appraisal Of The Corporate Governance From Institutional Investors' Perspective

Institutional investors are the legal forms of investment organizations. As the environment changes since 1980s, mutual funds and other institutional investors in the United States shifted in paradigm from negativism to activism, as powerful representatives of the interests of shareholders began to participate in corporate governance. Similarly, Chinese institutional investors in recent years have experienced similar trends. As a prerequisite for participation in governance, China's institutional investors need to learn from international experience, adapt to local environment and the company's own development needs. This will naturally result in the need for institutional investors to rate the governance of the target corporate. Such developments will result in a number of benefits:they may help China's institutional investors to form a new business profit model, to reduce agency problems and shareholder diversification issues, to prompt target company to improve the quality of governance, to build the confidence of institutional investors, to attract stable long-term capital flows, and to improve the overall well-being of the society. This dissertation explores China's funds and other institutional investors'rating of governance of target corporate. Theories used for the study include principal-agent theory, strategic management theory, conflict management theory and performance evaluation theory. The dissertation integrates research results of domestic and international researches, focusing on the shift from established governance structure to the optimization of governance mechanism, targeted to provide a set of evaluation indicators and their criteria, with a view to an objective judgments and evaluation of institutional investors to target identification index system of corporate governance. The dissertation combines results from domestic and international research and uses both theoretical analysis and empirical study. The author seeks to use such research to contribution to the laying of the foundation for fund institutional investors and corporate governance objectives'long-term development.The first part of this dissertation researches and analyzes the trend of institutional investors in corporate governance, and then introduces rating methods by institutional investors of the governance of the target corporate. The dissertation analyzes changes in the traditional models and methods institutional investors use in choosing the target company, trends in international institutional investors in governing the target corporate, and models of the United States, Japanese, German corporate governance. The dissertation compares national governance models and offers an analysis of their convergence. The dissertation then explores China's development of institutional investors in their specific environments, their participation in the target corporate governance and the trend of rating the corporate governance in target companies.Secondly, this dissertation uses literature review and mathematical analysis to analyze the objective rationality of institutional investors on the target corporate as well as the interests of the integration of corporate governance. The prerequisite of institutional investors in governing the target corporate include a principal-agent relationship, shareholder conflict of interest and the free-rider problem of interest, the competing interests of shareholders, managers and the internal control problem. This dissertation analyzes the motives and strengths of institutional investors in participating in the target corporation governance, as well as the effect analysis of institutional investors in participating in the target corporation governance, and research to institutional investors on the target game models of corporate governance to analyze, model and prove the integration of interests of institutional investors and managers.Thirdly, the dissertation offers a research on the boundaries, structure and framework of institutional investors in rating the corporate governance. It analyzes the necessity and content of the institutional investors participation in corporate governance from the perspectives of ownership structure, high-power structure, top management team governance, financial governance and environmental management. The dissertation analyzes the institutional investors'corporate governance procedures and principles, with a focus on the identification of target indicators of corporate governance, from the perspectives of ownership structure, high-power structure, top management team governance, financial governance and environmental management. The dissertation also analyzes the target of corporate governance recognition principles and methods and recognizes the contingency factor of indicator system.Fourth, the dissertation discusses the empirical study of institutional investors on the target of corporate governance. It begins by offering a description of the statistical analysis of the sample of corporate governance from the institutional investors' perspective. Then, the dissertation uses principal component analysis method to extract the key factors through the rapid clustering of positive samples for cluster analysis. It then discusses contingency for each type of empirical research samples, sums up the factors of objective corporate governance which get the higher scores among various types of contingency environments, and proposes a composite system of target corporate governance among various types of contingency effects.Fifth, based on empirical study and theoretical deductions, the dissertation offers some macro and micro policy recommendations based on the perspective of institutional investors'identification system of corporate governance. First, the government should actively develop qualified institutional investors to optimize their internal and external environment, and provide a good platform for their development. Second, the target company should actively improve their governance including ownership structure, high-power structure, top management team governance, financial governance and environmental management, to create conditions for institutional investors'investment and their own expansion. Institutional investors should also constantly improve their own governance. Last but not least, the government, the target companies and institutional investors should seek to achieve win-win symbiosis.