Research On The Role Of Securities Investment Funds In Corporate Governance

After 1980s, along with the development of economy and the growth of institutional investors, the institutional investors changed their strategy. The institutional investors in developed countries became an active role in corporate governance. The institutional shareholder activism means institutional investors giving up"the Wall Street Rule", taking part in corporate governance actively, through soliciting proxy voting rights, putting forward suggestions, consulting in private, etc. Institutional investments are the main stream of the capital market. Due to large quantity of shares, institutional investors'status is improved, and their effects are stronger, they are able to participate in corporate governance actively. Further more, because the institutions have large shares, the cost of supervision is relatively low, so the institutions have motivation to supervise, constrain the managers of the companies. Institutional investors have patience to keep long-term relationship with companies. Institutional shareholder activism has some positive influence on corporate governance, such as easing the phenomenon of free-rider, supervising the act of managers, improving decision-making of the company, increasing the market value of the company.Now in China, securities investment funds are the largest institutional investors in the capital market. With the growth of funds, improvement of our security market and quality of listed companies, securities investment funds become willing to take part in corporate governance. However, differ from foreign countries, there are only contract funds in our country, they face more obstacles in corporate governance. These obstacles could affect the effect of institutional shareholder activism, even may cause harms.By comparing and summarizing, studying foreign institutions and combining our country's practice, this paper analyzes the obstacles, inevitability and feasibility of the securities investment funds'activism. At last, this paper brings forward some proposal to let the funds play an active role in the corporate governance.There are about 45,000 words of the full thesis. The main part of the article consists of four chapters.Chapter I is the overview of corporate governance and good functions of the securities investment funds in corporate governance. As the Split Share Structure Reform (SSSR) is finished, it provides better conditions for securities investment funds to participate in corporate governance of listed companies. The participation of securities investment funds will improve the governance of listed companies, protect the interests of small and medium-sized shareholders of listed companies.Chapter II introduces the experiences that the institutional investors participated in corporate governance in developed countries. In this part, the author analyzes the reasons for the shareholder'activism, generalizes the ways in which the institutional investors act as active shareholders, and lists the positive functions of institutional investors'participation in corporate governance.Chapter III is mainly about the development of securities investment funds in our country, and obstacles, necessity, probability of the funds to play an active role in corporate governance. This is one of the important part of this paper. Now they have the will to participate in corporate governance, but there are still some obstacles for their"activism", especially the governance of themselves. Due to these problems, the securities investment funds can't work effectively in corporate governance of listed companies.Chapter IV evaluates questions which exist in China at present and proposes some the suggestion for improvement of China's current situation. We should create better conditions and encourage the securities investment funds to play an important role in improving China'corporate governance of listed companies.