Research On The Influence Of The Corporate Governance To The Institutional Ownership Decision

Ever since 1980s, Institutional Investor Activism comes up with the development of various institutional investors in the international capital market. Investors in the stock market step by step showing a trend of institutionalization and completely changed the pattern of corporate governance. Capital market gradually led into the era of institutional investors. Today, the size of China's institutional investors are gradually expanding, and also gradually optimize the internal structure. Institutional investors, with its information, capital, technology and human resources, and other areas, is gradually replaced by Individual investors to become the backbone of the securities market Power.Nowadays the development of institutional investors is becoming gradually mature. In the above context, what do institutional investors concern when investing? That problem has been deeply studied by scholars from both abroad and China. But the studies come to different conclusions. Base on the specificity of security market in China, in this paper, I will investigate which part of corporate governance will affect it. This paper aims to clarify the relevant indicators that the institutional investors should pay attention to when investing, and also aims to provide clear guidelines for listed companies to improve the quality of governance.This paper analyze the data with multiple regression, and I collected data from Shenzhen Stock Exchange, and by the methods of combining empirical research with positive research, I will Finally, I will measure listed corporate governance from four aspects:Shareholding Structure, Structure of Board of Directors, Management Incentive, Quality of Information Disclosure. Shareholding Structure can be measured by three indicators shareholding concentration, shareholding counterbalance and rate of circulating shares; Structure of Board of Directors can be measured by three indicators:rate of independent director, CEO duality and scale of board of directors; Management Incentive can be measured by two indicators:management compensation and management's share proportion; Quality of Information Disclosure can be measured by the evaluation level that can be got from the evaluation system of Shenzhen Stock Exchange.Through theoretical analysis and empirical testing, the result shows that shareholding counterbalance, rate of circulating shares, management compensation and quality of information disclosure have significant positive effects on institutional ownership, while shareholding concentration, structure of board of directors and management's share proportion do not. So we can conclude that listed corporate governance affects institutional ownership relative largely in China. Institutional investors should focus on shareholding counterbalance, rate of circulating shares, management compensation and quality of information disclosure when making decisions.The main innovations of this paper are:In the existed papers, the scholars always measure institutional ownership with the summation of share proportions which belong to the institutional investors from the top ten shareholders. Owing to that the institutional investors are all outstanding shareholders, in this paper the institutional ownership will be measured by the summation of share proportions which belong to the institutional investors from the top ten outstanding shareholders.