Research On The Institutional Shareholdings And Stock Price Volatility

For a long time, retail the investors leading structure has always been regarded as the main reason for the dramatic fluctuations and low efficiency of China stock market. In order to change the investors'structure and enhance the efficiency of the stock market, China has been promoting the policy of extraordinarily developing the institutional investors as a strategic guidance for stock market. In recent years, such as those brokerage and securities investment funds, the institutional investors have grown rapidly and became the major participants in the market. They are gradually showing their effect and becoming the more and more important leading power in the stock market of China.Following with the institutional investors'development, the academic research has paid its attention to the problem of whether the changing of these institutional investors'securities holding can affect the stock price's volatility or not. And the investors are also concerned about this issue. So to study the effect of the proportion of institutional investors holding shares to the stock price's volatility is a practical meaningful subject. It will help China to conducive the institutional investors'investing behaviors and the personal investors to investing rationally. Besides, in safeguarding the stability of the stock market, it also has some practical significance.On the basis of reviewing the relevant theoretical and empirical analysis about the effect of the institutional investors to the stock price, and using the institutions holding shares and stock price volatility as the breakthrough point, this paper studied the interaction between them, that is firstly the institutional investors holding shares to the stock price volatility and then the stock price volatility to the institutional investors investing behaviors. The following empirical study explored the effect of China's institutional investors holding shares on stock prices as well as the impact of fluctuations in the stock price changes affect the share number of institutional investors'holdings. In the empirical Study process, in order to test the effect of company size on the institution's shares holdings, as well as the fluctuations in stock prices, the author grouped the stock sample data according to the company size, and then using the Spearman correlation coefficient analyzed the relationship between company size and institutional shares holding median, as well as institutional shares holding median and stock-week volatility ratio. After that, under the then control of company scale, the author using Wilcoxon test method compared the stock-week volatility ratio differences between a higher proportion of institutional ownership and a lower one. Furthermore, the author studied the relationship between institutional shares holding number's change and stock price change. At last, according to the results of the empirical study, this paper put forward a number of policy recommendations on the development of institutional investors.