A Study On The Relationship Between Institutional Investor 's Holding Stability And Financing Constraints

MM theory points out that the perfect capital market does not exist in the real word.In the incomplete markets,the listed companies are hindered from external funding and they are generally faced with the problem of financing constraints.Institutional investors in the capital market in our country are becoming more and more diversified and they make great change in ownership structure.Institutional investors in the capital market preliminarily formed the pattern of coordinated development of all kinds of institutional investors in our country.Especially since 2006,with the rapid development of securities investment funds,the scale of investment in the insurance industry increased in the rate of more than 30% every year.The average growth rate of investment funds is over 100%.The performance of bond funds,QFII and enterprise annuity are also good.Institutional investors have played an important role of automatic adjuster in the capital markets. There have been many studies from local and abroad show that the institutional investors holding the shares of the listed companies has become one of the major ways to corporate governance and ease the financing constraints.Due to the different types of institutional investors, they have different ability of participating in corporate governance. We conclude that the impact on financing constraint levels are also different. The article use holding stability to measure the effect of the financing constraints to the company, in order to examine the effects of various types of institutional investors holding stability.Firstly,the paper reviews related research to summarize interaction between institutional investors,corporate governance and financing constraints.Then we analyze the development of institutional investors in our country and the relevant theoretical about financing constraints.On the basis of these,makes the assumption about different types of institutional investors may have different effects on the stability of financial constraint level.In empirical research,proposed by Almeida in the cash flow model to measure the financing constraints. We use 103 listed companies in Shanghai and Shenzhen A-shares exchange real estate listing corporation from 2010 to 2013.Through analyse of the relevant panel data on the assumptions for empirical research and test,finally we draw the following conclusions:1. Compared with individual investors,the institutional investors in China can play better in a role of supervision and have more motivation and power to participate in corporate governance.Thus they can reduce the financing constraints,improve financing ability and produce the restriction of the big shareholder.2.Different types of institutional investors have different effects in alleviating financing constraints.Pressure-resistant institutional investors can ease financing constraints effectively.Because they have long-term investment relationship with company. While the pressure-sensitive institutional investors also can relieve the financing constraints,but the impact is not as obvious as pressure-resistant institutional investors.3.Different types of institutional investors holding balance degree have different effects in alleviating financing constraints.Pressure-resistant institutional investors can check and balance the dominant stockholder effectively.While the pressure-sensitive institutional investors can also relieve the financing constraints.But the impact is not as obvious as long-term relationship pressure-resistant institutional investors.