An Empirical Study Of Institutional Investors Performance Of Listed Companies

Institutional investors were originated in Western capital market. Due to the needs of the market, institutional investors have been developing rapidly since the1980s, and have become an important force in the stock market so far. The rise of the shareholder activism promoted positive changes in the attitude of institutional investors on corporate governance. Because institutional investors have a great advantage in economic strength, holdings scale, professional competence, as well as information and human resources, more institutional investors began to participate in corporate governance. It improves the company’s governance structure to a certain extent, then affects the company’s performance as well. In recent years, institutional investors in China have had a rapid development with the country’s support. It not only provides a new opportunity for the improvement of Chinese listed companies’ governance structure, but also has exposed many problems in the development process. At the current, the domestic capital market is not yet mature and the system construction is not perfect. In such a background, it’s very necessary for us to deeply study the role of institutional investors in corporate governance and their impact on corporate performance. We should learn the advanced international experience to develop our institutional investors. It has a very important significance on the improvement of our corporate governance mechanism and the capital market. The specific contents of this paper are as follows:(1) By studying and reviewing scholars’ research and literature on the subject, this paper briefly discusses the definition of institutional investors, corporate governance and other related concepts. Then the paper analyzes the theoretical basis of the subject and the motivation and ways that institutional investors participate in corporate governance and affect the company’s performance.(2) In the part of building the empirical model, we use the broad definition of institutional investors and limit the industry factors to manufacturing industry. Then we collect591listed manufacturing companies’ latest financial data of2007-2011as samples, and select financial indicators earnings per share, return on equity and market indicators P/B, Tobin’s Q together as the variables to measure corporate performance, trying to make the results more reliable and comprehensive.(3) On the basis of the empirical model, this paper uses a variety of methods such as descriptive statistical analysis, correlation analysis and regression analysis. We explore the impact of institutional investors on the listed companies’ performance by empirical analysis. Then we verify the empirical results and hypotheses, and try to provide a reasonable interpretation and analysis.(4) The theoretical analysis and empirical result shows that institutional investors have a positive impact on corporate governance and can be beneficial to the improvement of corporate performance. At last, based on the current situation and problems of institutional investors, this paper puts forward several suggestions, such as improving the external capital market and relevant legal systems, strengthening institutional investors’ own construction and giving them more support, improving the quality of listed companies, etc.