Study On The Effect Of Institutional Investors’ Stock-holding To Over-investment Of Listed Companies

The fixed asset investment rate has always been high in China,it even rose to66%in2007-2011in response to the global crisis. The investment has a great effect on economic growth, but over-investment will result in unreasonable cheap price, capital asset prices rising, repeat construction and the waste of resources,etc. Macro over-investment affects the micro listed company, especially the particularity absence of the state-owned shares in most listed companies of China, the management tends to expand the scale of the company for self-interest with blind investment which will damage the interests of the shareholders of a companyShareholder activism began to prevail Since the1970s, with the rapid development of institutional investors in developed countries’capital markets and the gradually increase of the shareholding. Institutional investors in China presents a rapid development trend with the gradually development of the capital market as well as the policy In recent years, Under this background, the institutional investors gradually changing investment philosophy and towarding to value investing, they began to use the advantage of information and technology tio supervise the management of listed companies, to improve the efficiency of the investment decisionsThis paper firstly introduced the present situation of the institutional investors in China, then theoretically analyzed the supervise of the company’s management by the internal and external mechanisms which the institutional investors was participate in. it affected the management mechanism of investment decision-making and enhanced the efficiency of corporate investment. This paper chose the data In China’s A-share listed companies from2009to2011as sample.This paper will study on the effect of China’s institutional investors’over-investment in listed companies from the angle of Institutional investor shareholding as a whole, different types of institutional investor shareholding and the overinvestment level of listed companies.Based on predecessors’ experience and the actual situation in our country, this paper constructed appropriate model to study the relationship between institutional investors and over-investment behavior of the listed companies, the empirical results show the fact:(1) the investment inefficiency of listed companies in our country were universal existed, compared with inadequate investment, over-investment is more serious.(2) the shareholding proportion of the institutional investors and the over-investment level of listed companies had significant negative correlation relationship, the higher the institutional investor shareholding is, the stronger the enthusiasm of supervise the listed company’s investment decision, and the company’s investment efficiency will be better.(3) With the analyze of the classification of the institutional investors, we found that the independent institutional investors can perform more actively in the role of supervisors because they had no other business with the invested companies., rather than the independent institutional investors which had business relevance with invested companies, the supervise to the invested company management will affect its own business, so it is difficult to supervise the invested company management..According to the empirical results, this paper puts forward the following Suggestions:(1) improving the base system of capital market to create a great market environment for institutional investors;(2) improving the governance structure of listed companies, to encourage institutional investors participating in corporate governance;(3) promoting the diversified development of institutional investors and improving the structure of the institutional investors.