Research On Institutional Stockholdings' Impact On Investor Protection

Investor protection is the cornerstone for the healthy development of the securities market. Only when the investors'equity is protected fully,the securities market will develop healthily and continuously. The phenomenon that big shareholder encroach on small shareholders is common in listed companies in our country. Especially, thanks to the highly centralized holding rights of state-owned shares, the agency conflict between controlling shareholders and minority shareholders is the salient agency problem in listed company. In western countries, the shareholders'positivism practice has shown that the institutional investors are positive to solve the interest conflict between controlling shareholders and monitory shareholders. Since Chinese CSRC raised "exceptionally, creatively cultivating and developing institutional investor" in 2000, with the share-merger reform, the institutional investors have become important forces in corporate governance. In consideration of the influence of securities investment funds among institutional investors in China, the paper takes securities investment funds as representative to scrutinize the influence of the institutional investors on the equity protection of medium and small investors, by using datum in 2006-2009 of manufacturing listed companies in Shanghai securities market as sample.The paper separates the samples into two groups, those with institutional investor and none. By introducing descriptive statistics,independent sample mean comparison,regression analysis and other methods,taking main operate profit ration,dividends per share and the ultra-ability cash dividends as the dependent variable,setting the proportion of the fund shareholding as the independent variable,employing asset-liability ration,company scale,the proportion of controlling shareholders and the shareholder class as the control variables, this paper scrutinize the influence of the institutional investors on the equity protection of investors. When studying the investor protection, we take the institutional investors'impact on cash dividends into consideration. Firstly in this paper, we divide the samples into two groups; the one with normal cash dividends versus another with abnormal ultra-ability cash dividends. Each group is bipartite again for fine analysis according to whether the sample has institutional investors.The empirical study result shows that: there has been a significant positive correlation between the shareholding proportion of securities investment funds and the listed companies'performance,so as the power balance with funds shareholding and the listed companies'performance. This indicates that securities investment funds have taken participation in corporate governance. The larger the proportion of funds'holding, the better the corporate governance, so as the better the interest of investors was protected. As for cash dividends, study shows that shareholding proportion of securities investment funds has a positive correlation with dividends per share for those samples of the group with normal cash dividends. This study also shows that there is an amazingly inconspicuous positive relativity between the evil intention of cash dividends and the shareholding proportion of funds. This means that institutional investors may have"moral risk", encroaching on minority shareholder by conspiring with majority shareholder。The possible innovations in this paper lie in:Firstly, when study the influence of institutional investor on investor equity protection, the majority of scholars conduct their research form the view of information disclosure with company performance. This article has synthesized predecessor's research results, conducting the research from the aspect of cash dividends with company performance, comprehensively reflected the influence of institutional investors on investor equity protection.Secondly, in former models for cash dividends'influence on investors, don't distinguish whether the amount of cash dividends is normal or abnormal. In this paper, we divide the samples into two groups; the one with normal cash dividends versus another with abnormal ultra-ability cash dividends. On the basis of this division, this paper conducts its research on institutional stockholdings' impact on investor protection. This makes the conclusion more rigorous and comprehensive.