The Empirical Study Of Institutional Investors And The Financial Performance Of Listed Companies In China

In the global capital market, institutional investors become more and moreimportant. Since1990s, institutional investors have been playing a leading role andexerting positive function in the corporate in British and American where the capitalmarket is relatively mature. Since1997when institutional investors were allowed toenter our country, they progressed step by step with the development of the stockmarket. By now, institutional investors have become the subject of Chinese financialmarket.Based on the theory between institutional investors and corporation governance,the theory between institutional investors and financial performance, the article isgoing to make an empirical study around the theme of the institutional investors inChinese capital market and listed companies using for reference of foreign researchmethod of institutional investors. Testing the relationship of institutional investors andlisted companies is in order to judge if the institutional investors have had thecapability to become value discovers. The article also wants to find if the institutionalinvestors will impact the financial performance of listed companies and study theaction mechanism of different types of institutional investors to the listed companies.According to the empirical study, this article finds that Chinese institutionalinvestors don’t play well in the role of value discovers and they don’t have the abilityto improve the financial performance of listed companies. However, different types ofinstitutional investors have different effects on the financial performance of listedcompanies. This article also finds securities investment fund plays a leading role inChinese capital market, and this is because of the imperfect of Chinese capital marketand the limitation of institutional investors. When institutional investors join thecorporation governance, they can just have limited and positive influence. In addition,earnings management may result in indistinctive relationship between institutionalinvestors and financial performance.In the end, this article gets some enlightenment. First, the institutional investorsin China don’t have the function of discovering and creating value; Second, different types of institutional investors have a different effect on the financial performance oflisted companies. While, this article considers that Chinese capital market need toimprove itself and the behavior of listed companies need to be ruled. And it’snecessary to pay more attention to earnings management and develop the institutionalinvestors who should join positively in the aspect of corporation governance healthily.