A Study On Relationship Between Institutional Investors' Shares-holding And Financing Efficiency Of Listed Companies In China

In the past years, the institutional investors have developed dramatically in China, they have become an important force on security market gradually, and more attention have been paid to them, especially on their investing-behaviors and investing-influences on the market. Therefore, the paper is to research about the relation between institutional investors'shares-proportion and the efficiency of financing in listed companies based on our present security market, and aim to be helpful for the government to manage them.The research methodology adopted in the paper is the combination of normative and positive research method. The normative research method has been used in theory expressions. On this issue of institutional investor, the efficiency of financing in listed companies and so on, the author has creatively given her own exposition.When researching about the relationship between institutional investor and the efficiency of financing in listed companies, the author expected that the shares-proportion of institutional investors would promote the efficiency of financing in listed companies mainly through constraining the inefficient financing. Therefore, the author turns to research about the relationship between institutional investors'shares-proportion and the inefficient financing in listed companies. The author has creatively given the inefficient financing assessment model. The positive research method has been used in empirical analysis. Firstly, it's a creative summary description of the overall development of shares-proportion of various institutional investors. Then, the average financing efficiency of China's listed companies has been measured. Subsequently, for the relationship between institutional investors and financing efficiency in listed companies, 3 hypotheses have been studied about two directions from shares-proportion and time of holding shares.From the positive analysis some results are found as follows: Firstly, the institutional investors'holdings in the entire market have developed dramatically. Among them, Security Investment Fund has obtained fastest-growing. And Social Security Fund, Insurance Company also have been involved in the corporate governance, but their growth slower than Security Fund, still have a great potential to develop.Secondly, China's institutional investors, on the whole, have persisted in the philosophy of investing on value, and promoted the efficiency of financing in listed companies. Social Security Fund has the most prominent tendency, and those of Closed-End Fund and Non-financial listed companies are also obvious. But QFII do not show the same characteristic as we expected.Thirdly, the longer Closed-End Fund, Social security fund and Non-financial listed companies hold their shares, the more they promote the efficiency of financing in listed companies. Worthy of note is QFII, although the promotion of QFII acting on the financing efficiency is not obvious, but the conclusion above is also set for QFII.Finally, in accordance with the conclusion of this paper, the author has made recommendations that the government should continue to vigorously develop institutional investors, improve the structure of institutional investors, especially to develop Social Security Fund and other long-term institutional investors.Meanwhile, the government should improve the quality of institutional investors and better the internal governance structure. Do everything possible to improve the ability of institutional investors to involve in corporate governance, to help them persisting in investing on companies'internal value, supervising the major policy decisions in listed companies and avoiding the inefficient financing.