Study On The Institutional Investors Involving In Corporate Governance Of Chinese Listed Company

In 2000, China Securities Regulatory Commission (CSRC) claimed that "government will nurture and develop institutional investors unconventionally and creatively". As a result, market value held by institutional investors was up to about one third of the total liquid market value by the end of 2008, and institutional investors are becoming one of the most powerful investors in China's security market. The equity division phenomenon in China's security market and the equity division reform give us a unique situation in studying the effects of institutional investors. This profound and systematic reform created conditions for institutional investors to participate in corporate governance. This paper studies the effects institutional investors on the listed companies, and analyzes institutional investors'willing to participate in the listed companies'governance. What obstacles and challenges do they encounter? Do they really have positive effects on corporate governance? What policies should be enacted to encourage and restrict the institutional investors'action? The answers to the questions will consist of the main content of the study.After introducing concepts such as corporate governance and institutional investors, reviewing related literature data from China and abroad, this paper summarizes opinions of the literatures in three aspects, which are institutional investors' willing and motivation to participate in corporate governance, the effects of their action and the methods and means they have used. On the basis of these researches, the paper studies the roles which institutional investors are playing in different corporate governance models and then points out that the government should take measures suited to local conditions in guiding institutional investors' participation.Then the paper mainly studies the corporate governance in China, the willing and obstacles of institutional investors' participation in corporate governance at present. After the above study, the paper points out that due to lack of motivation and full of obstacles, maybe the institutional investors are not enthusiastic on corporate governance. Based of the above idea, this article makes further theoretical analysis on this issue, utilizing the data dated December 31st,2008 of China listed A shares by SPSS statistic software and using the method called Independent-Samples T Test. The empirical studies discusses if it is notable between institutional investors' shareholdings proportion and the whole situation of corporate governance. It indicates that the united force of Chinese institutional investors has a notably positive impact on the financial performance and growth potentials of listed companies. To some extent, the existing of institutional investors has balanced share structures, but it has no obviously direct impact on corporate governance. At last, on the basis of theoretical and practical analysis and elaboration hereinbefore, the paper makes conclusion and gives some suggestions on how to encourage institutional investors' participation on corporate governance.