The Study On The Exercise Of Equity By Mananger Of Security Investment Fund

This paper focuses on the problem that the manager of securityinvestment fund is unwilling to participate in the corporate governance inChina. It analyzes the causes from both internal and external perspectives,discusses the problem by using different theories and proves that it isnecessary for the fund manager to participate in the corporate governance.Finally it gives some proposals on how to strengthen the fund managerinvolvement in corporate governance.In addition to introduction and conclusion, the paper consists of fourparts. It follows the logical order of "to ask questions——to analyze thereasons——to provide the solutions". The arguments focus on the necessityof strengthening the exercise of equity by the fund manager. In order tosolve the problem, the exercise of equity by the fund manager will bestrengthened, and the legislation on the exercise of equity by the fundmanager will be made more perfect.Based on the introduction of definition and characteristics of securityinvestment fund, ChapterⅠmake sure that the security investment funddiscussed in this paper is the public offering fund，which invests in thestock market. Then it argues that the problem is special, because the fundmanager exercises the equity on behalf of the fund. Although the securityinvestment fund has become the major institutional investor in the market,but there are still such problems as short-term investment and "vote withtheir feet".ChapterⅡ provides the analysis of internal and external causes of the fund manager being unwilling to excise the equity. As to the internal causes,it shows that there exists the different interests and information asymmetrybetween the fund manager and the investor. Thus, it is inevitable that thefund manager is unwilling to exercise the equity. In the analysis of externalfactors, this thesis puts forward that the problem could be explained fromhistorical and cultural perspectives. At present, the security investment fundmakes profit from short-term investment, and has entered into the period ofvalue investment. Combined with the prevalence of speculative culture instock market, it leads to the lack of the fund manager involvement incorporate governance.Chapter III proves the necessity of strengthening the exercise of equityby the fund manager from three perspectives, which provides thetheoretical basis for the following argument. As the trustee, the fundmanager exercises the equity, which is the fulfillment of the fiduciary dutyfor the investors. Moreover, as the shareholder of listed company, the fundmanager has the right to participate in corporate governance and exercisethe voting rights. The fund manager can effectively solve such problems as"internal control", which is against the interests of minority shareholders.On the basis of the previous argument, Chapter IV demonstrated theproposals on legislation about the exercise of equity by the fund manager.First, put forward clear standards about the fund manager’s duty of care.The fund manager should not only have professional qualification or ability,but also take measures which meet the objective criteria. Second, it isnecessary to introduce the legislation on information disclosure of theexercise of equity, in order to regulate the exercise of equity by the fundmanager and prevent the appearance of collusion. Finally, diversify themethods of the exercise of equity by the fund manager. The fund managercould not only take measure according to corporate law, but alsocommunicate through private meetings or make public criticism by meansother than corporate law rules. Thus, the security investment fund can playits due role in the construction of the stock market.At the end is the conclusion, which is the summary of views. It makesa simple review of analysis and arguments, and lists the proposals on howto make the legislation on the exercise of equity by the fund manager more perfect.