The Effect Of Information Transparency On Institutional Investors' Holding Behavior

Using Chinese listed companies in Shenzhen security market from 2005 to 2009 as research samples and Shenzhen security market's evaluation results as a measure of information transparency, this paper analyzes the effect of information transparency on institutional investors'holding behavior.The empirical results verify that our assumption and show that information transparency has significant effect on institutional investors' holding behavior. The higher transparency the company disclosures, the more stock institutional investor will keep on buying and holding. And they will obviously increase holdings of the transparency upgraded companies, and decline holdings of the transparency downgraded companies. An even more important finding is that the different participation level of the institutional investor into the companies, the different sensitivity to the information transparency. In addition, the study also find that the higher transparency of information, the stronger reliability of the companies'performance. The information transparency can observably enhance the influence of the performance to the institutional investor.It is very important to study the effect of the listed companies'information transparency on institutional investors'holding behavior, which will promote supervision departments to improve listed companies'information disclosure regulations and arouse listed companies improving their information transparency.