The Effect Of QFII On The Agency Problem And Corporate Performance Of Chinese Listed Companies

The development of economic globalization and the introduction of the institutional investorstabilize the development of Chinese capital markets effectively. With the increasing size of theinvestment, institutional investors become more and more active in the capital market and theimpact of them on the corporate governance of listed companies reveal gradually. In order toavoid the impact of foreign-currency inflows on capital market, our country introduced the QFIIsystem in2002. As foreign institutional investor, QFII has the abundant capital strength,professional investment team, extensive management experience. And QFII is of greatsignificance to reduce the problem of agency and to promote the corporate governance of thelisted companies in our country.In this paper, the author firstly reviews the existing researches about the institutional holdings,corporate governance and QFII. In this basis, the author points out the research ideas andmethods and sets up a complete research framework. Then, the author analyzes thedevelopment of QFII in China and its motivation, mechanisms and ways of participation incorporate governance. According to the first kind of agent problem, the second and thecorporate performance，the author puts forward some research hypothesis and builds theempirical models respectively. With the data of companies listed in Chinese capital market from2006to2011, the author uses QFII shareholding and lagged1phase shareholding of QFII asexplanatory variables to verify the influence of QFII on the agency problem and corporateperformance. The empirical regression results through the robustness test. According to theresults, QFII can reduce the agency problem and improve corporate performance, but therelationship of QFII and two kind agency problems have significant co-movement, whichmeans that twp kind agency problems and corporate performance have a significant effect onshareholding of QFII in listed companies in China. Finally, this paper put forward somesuggestions to the regulatory authorities and the other investors respectively.