Government-control、Mutual Fund Ownership And Firm Performance

From1998the institutional investor such as mutual fund appeared, the institutional investor has developed fast and become more influential and powerful in the capital market. In China, there is a high concentration of shares of listed companies; the government expects much from the institutional investors that they can help the list company improve corporate governance and performance. In2004, the State Council issued the "advance on the capital market reform, opening up and stable development of a number of opinions", the purpose of the opinion is to encourage institutional investor contribute more to the corporate governance. Meanwhile, academic circles also have done much research on this sphere, but the past research always consider all kinds of institutional investor as a whole, neglect the fact investment goals and risk tolerance are different among the institutional investor,the final effect of them to the corporate governance may not be the same with each other. So, it is necessary to research the impact of mutual funds’ ownership on firm performance specially. One innovation is the paper investigates State-owned equity structure how to affect the relationship between mutual funds and List Company.There are six chapters in the paper, the first chapter introduce the background of the research, analyze the theoretical significance and utility value for this research. It also introduces the opinion of the paper, the methods of the research, the difficulty of the research, and the innovative points of the paper. The second part of the paper mainly introduced the detailed development of mutual fund and the important role in the capital market. The third chapter, we review the current research achievement on the topic in both China and foreign countries. In chapter four, we try to expound the mechanism that how do institutional investors participate in corporate governance; summarize the concept of corporate governance, the particularity of the state-owned company governance.We begin our empirical research in chapter five, using a large sample of mutual fund ownership for the period of2006to2010; this study reexamines the relationship of mutual fund ownership and firm performance, and the influence of government-control on this relationship. The result shows that mutual fund ownership has a positive effect on firm performance, and the positive effect of mutual fund ownership on firm performance in government-controlled firms is smaller than that in non-government-controlled firms. This suggests that the mutual fund indeed has corporate governance effect but this effect is limited in government-controlled firms.Finally, the paper gives some suggestions according to the research conclusions, hoping this attempt can help institutional investors contribute more to the corporate governance.