A Study On Influence Of Institutional Investors On Related-party Transactions In The Listed Companies

Institutional investors are the power that can not ignore in the capital market. Domesticand international research shows that institutional investors have certain corporate governanceeffect. In this paper, we will show the effect of institutional investors to the related-partytransactions of the listed companies in our local market. And this has important theoreticaland practical significance for institutional investors whether as a corporate governancemechanism involved in the governance of corporate governance, reduce the level ofrelated-party transactions, to protect the interests of minority shareholders as well as how tofurther develop the institutional investors in China’s capital market.Through the literature review, we sort out the technology roadmap, then analyze thestatus of institutional investors and related-party transactions of the listed companies and theproblems between them, propose the hypothesis and build a multiple linear regression modelin this article on the basis of corporate governance theory, principal agent theory and theownership structure theory. The model use the total amount of related-party transactions ofthe listed companies as explanatory variables, use the size of institutional investors, theheterogeneity of institutional investors and the degree of the balance of the equity of actualcontrol to institutional investors as an explanation variable, select the3005non-financial andinsurance companies on Shanghai and Shenzhen A-share listed during the2008-2010as astudy sample to research the affection of institutional investors to the related-partytransactions of the listed companies. The empirical research comes to the conclusions asfollow:(1) The scale of institutional investors and related-party transactions of the listedcompanies has a significant negative correlation. The scale of institutional investors ismeasured by the institutional investors’ ownership and institutional ownership number. Theinstitutional investors’ ownership and related-party transactions of the listed companies has asignificant negative correlation in the10%level, the number of institutions ownership andrelated-party transactions of the listed companies has significant negative correlation underthe10%level.(2)The pressure-resist institutional investors’ ownership and related-partytransactions of the listed companies has a significant negative correlation in the10%level, thepressure-sensitive institutional investors’ ownership has no significant effect on related-partytransactions of the listed companies.（3）The personal equity balance degree of institutionalinvestors to the actual control and related-party transactions of the listed companies has asignificant negative correlation in the10%level.The study has the following meanings:(1) The results show that institutional investors have a corporate governance effect, and one of the important way is changing the associatedtrading strategy of listed companies, reducing the level of related party transactions, safeguardtheir own interests while protecting the interests of small shareholders.(2) The scale ofinstitutional investors and equity balance degree have a significant effect to related-partytransactions of the listed companies. The result has a certain reference value for correctevaluating the role of institutional investors in corporate governance and how to furtherdevelop institutional investors in China’s development strategy.(3) This study has a strongpractical significance in lowering the level of related-party transactions of the listedcompanies and how to build and improve the corporate governance mechanism to mitigate orsolve the agent and protect the interests of minority shareholders.