International Operations, Institutional Investors And Corporate Performance

Nowadays, with the development of competitive international market, the management environment is significant changes, more and more Chinese enterprises participate in international operations. Since the reform and opening-up policy, Chinese enterprise's international operations have made a great progress, and presents a good development situation. After China joins the WTO, the level of opening gradually deepens. The domestic market turn to international, and international market domestic-oriented. The competition pattern has been formed. At the same time, the rapid development of institutional investors in the capital markets plays an important role in corporate governance. "Shareholder activism" think that institutional investors play an active role of shareholders and involve in corporate governance, institutional investors can be major issues of general meeting of shareholders to exercise the shareholder power, so they can improve corporate governance to improve the enterprise's corporate performance.The foreign and domestic scholars make extensive research on the relationship between international operations,institutional investors and corporate performance. The research already transfers from qualitative to quantitative level. But at present, there is no consistent research conclusion. The domestic research generally lack of systematic, and in the internationalized operations background, the research on the relationship between international operations, institutional investors and corporate performance is still a blank.This paper adopts the normative research and empirical research methods. Comprehensive use of economics, management, statistics, and other disciplines related knowledge, specific using literature and theory analysis, correlation analysis and regression analysis. This paper base on Chinese international management background and specific corporate governance structure of multinational enterprises, studies that with the rapid development of institutional investors, whether they could effectively improve the corporate governance of international operations enterprises, so as to enhance the enterprise's manage achievement. Empirical studies the affect of the level of international operations, the ratio of institutional investors, the ratio of first shareholding and the nature of first shareholding to enterprise's operating performance. It provide a new idea for the development and testing of an international development strategy for enterprises. This paper has both positive practical and theoretical significance.Firstly we reviews the literature of the relationship between the level of enterprise international operations and corporate performance, the relationship between the ratio of institutional investors and corporate performance, general theory of international operations, and the uniqueness of corporate governance of multinational enterprises. Secondly we analyses the reason of international operations affect the corporate performance, the reason of institutional investors involve in corporate governance, and the factors that institutional investors affect operating performance. Then we empirical analysis the affect of the level of international operations, the ratio of institutional investors, the ratio of first shareholding and the nature of first shareholding to enterprise's operating performance. Finally, there is a summary of the full text.This paper's main conclusions are:1. The corporate performance of Chinese multinational enterprises is not very satisfactory, and each enterprise performance is more different. International operations is still at a low level. Various enterprises' internationalization degree is uneven, most enterprises use export trade as the main form of international strategy. Institutional investors occupy a certain position in the source capital for multinational enterprises, but compares with the developed capitalist countries, the ratio of institution equity is less. The multinational companies whose first shareholder is state-owned shares are more than whose not. There are a uneven distribution of industries structure of multinational enterprises in China, manufacturing enterprises accounted for the vast majority of multinational enterprises.2. The quantity of Chinese manufacturing enterprises is rising year by year, and international operations level accelerated ceaselessly. But the performance of Chinese multinational enterprises negatively correlate with the degree of internationalization. Chinese international operations is in the stage that exports changes to total foreign investment, in this one phase, after a period of international practice, in order to obtain more space for development, most enterprises in China gradually increase in direct investment in foreign markets, and thus more close to the target consumer market. However, with the increase of the foreign production and sales agencies, enterprises face with cross-regional and cross-cultural management issues etc. The costs of international operations are more than the proceeds of international operations. But with the posture of Chinese internationalized operations, the enterprise use in organizational learning function, accumulate experience, and gradually adapted to cross-regional and cross-cultural management methods. Some enterprises are actively adopt foreign direct investment in international operations, and it is temporary that the ratio of international operations negative correlation with corporate performance. With the deepening of the international level, corporate performance will gradually improve. 3. It is positive correlation between the level of international operations and corporate performance. With the development of institutional investors, they occupy a certain position in the source capital for multinational enterprises. Contrast with individual investors, institutional investors have the information, size and personnel advantages, they are rational investors. They can overcome the "free-rider" behavior of the individual investors in corporate governance. Chinese institutional investors in internationalized management plays a positive role of shareholders, and are able to improve corporate governance to enhance the enterprise's corporate performance. Institutional investors in China international operations have positive influence.4. The size and nature of first shareholder are unrelated to corporate performance of multinational enterprises. No sufficient evidence prove that the big state-owned share limits the development of multinational enterprises, probably because of state-owned shares will be affected by the state policies, they are more active in promoting the internationalization process.The innovation points of this paper mainly include:1. It is the first time to study whether the institutional investors ratio impact on corporate performance of multinational enterprises in China. This study has strong practical and theoretical significance. Chinese internationalized operation related studies are mostly based on an industry or certain enterprise as samples, but this paper adopts the internationalization management enterprise of all listed companies as a sample. We adopt the latest panel data of 2005-2008 to effectivelyj inspect the impact of internationalization management level and the ratio of institutional investors to the enterprise's corporate performance.2. This paper respectively choose ROE and Tobin's Q value as the measure of performance indicators. We use financial index and market indexes measuring operational performance as dependent variable in empirical analysis and comparing the regression results. The evidence of conclusions and recommendations are more fully. We appropriate select the control variable parameter, the empirical results are more accurately.3. We built the model carefully, so that modeling results are more worthy of learning.