Research On Institutional Investors Participating In Corporate Governance

At the background of rapid development of international institutional investors and the rise of shareholders'positive behaviorism, China's institutional investors developing rapidly and its influence is increasing day by day. Institutional investors are not only the backbone of development of securities market, but also the important factor of optimizing the corporate governance of listed companies. According to the provisions of China's "Company Law", as shareholders, institutional investors have rights to look up, propose and vote for decisions on important issues, such as major affiliated transactions, external guarantees. Meanwhile, they can directly participate in the corporate governance of listed companies. However, in reality, whether institutional investors in China can participate in corporate governance of listed companies like foreign institutional investors is still should be verified. The purpose of this paper is to study and analyze the impacts of China's institutional investors in the corporate governance based on the institutional investors' influences on the "tunneling" behavior of large shareholders in the listed companies.On the basement of definition of institutional investors, this paper use of theory of principal-agent and property rights to theoretically analyzes the relationship between institutional investors and corporate governance and further analyzes the motivation and means for institutional investors to participate in the corporate governance. The part of empirical research selects listed companies whose stocks public offer in the Shanghai Stock Market from 2006 to 2008 as study sample and use pool data model to do empirical test. We can make empirical conclusions as follows:In the year of 2008, which the price of stocks was decreasing, the average ration of share holdings of institutional investors increase from 5.8% to 5.29%. It shows a part of institutional investors only focus on the immediate benefits not the long-term benefits at some degree, and there is speculative behavior. Second, there is significantly negative correlation relation between institutional investors'shareholding ration and funds occupation of lager shareholders of listed companies and related parties guarantee; There is significantly negative correlation relation between institutional investors'shareholding ration at the end of last year and funds occupation of lager shareholders of listed companies and related parties guarantee in this year. It proves that institutional investors can suppress the behavior of "tunneling" of large shareholders of listed companies and fully illustrates that institutional investors play positive role on the corporate governance. At last, according to the conclusions, this paper proposes suggestions about how to better develop institutional investors and how to make institutional investors participate in the corporate governance positively and improve the governance situation of listed companies.