A Study On The Impact Of Institutional Investors' Shareholding On The Performance Of Listed Companies

Institutional investors as an important part of the investors system has become a shining star of our country’s capital market. The accounts number and share value of the institutional investors are increasing in a linear upward trend. The proportions of shareholding in the company that institutional investors accounted for are also constantly increasing. As we all know, institutional investors have their special status and advantages, such as capital advantage, professional advantage and information advantage. Driven by the shareholder activism and specific motivation, institutional investors have gradually become value creation investors to value found investor. They eliminate the negative Wall Street investment method and become to long-term investors and positive law shareholders. They supervise and intervene directly the corporation’s management behavior by means of the internal and external mechanism to improve the management level of the company and enhance the performance of the company, then they can obtain the long-term profit.This paper research on the correlation of institutional investors and the listing Corporation’s performance which based on the sample of Shenzhen A shares that have institutional inveators in the top ten sharesholders between2011to2012. First of all, this study analyzes the characteristics of institutional investors and the listed corporation governance mechanism theoretically, and then analyzes of the influence of institutional investors on the performance of listed corporation empirically. The study found that shareholding ratio is positively related with ROE and EPS,which shows that institutional ownership is conducive to the improvement of company performance. Research from the lag phase of the empirical result shows that the institutional investors shareholding are positive correlated with listed companies performance,from which we can know that institutional investors have become value creator from value discoverer. In the further study of this paper, we found that the listed companys’largest shareholder ownership is positively related with corporate performance which reflects the dominance situation of listed companies in our country are still prominent and single controlling phenomenon is quite obvious.The lag effect verification shows that the largest shareholder ownership is not significantly relateted with corporate performance,this is because that the institutional shareholders gradually involved in the governance of the company. Because of China’s securities market and the development of institutional investors are not mature, and also deeply influenced by the special historical factors of China’s capital market. There are still many obstacles which hinder the institutional investors to participate in the corporate governance process deeply. So there is still great room for the development of our country’s institutional investors. On the basis of the above research, this paper puts forward some suggestions such as vigorously support and foster the institutional investors, improve the listed ’corporates; governance mechanism, perfect the relevant legal system construction, purify the environment of capital market.