Empirical Study On The Effect Of Institutional Investors’ Behavior On Stock Price Volatility In China

In 2001, our country put forward the "extraordinary development of institutional investors" strategy, in the hope that through in the market introduction of a lot of rational professional investors to improve China’s stock market investors structure, and reduce the price fluctuations in the stock market, to stabilize the market. With the rapid development of institutional investors, such as securities investment funds, institutional investors have played an important role in the stock market of our country.Whether institutional investors can play the role of stabilizing the market has been the focus of management and academic discussion. By using different models and analysis methods, the research results at home and abroad have been widely divergent. Considering the problem of endogeneity between institutional investors stock selection bias and stock volatility, the final selection of the propensity score matching(PSM) model, paired foundation in is similar in financial accounting, corporate governance and market institutions and common stocks, the transaction data and institutional shares were compared and analyzed, from the micro level test in our country to securities investment funds, as a represen tative of the institutional investors on the volatility of the stock market impact.The empirical results show that institutional investors in the choice of stock when the preference of the financial situation is good, the company is well managed and has a strong development potential, and this kind of stock usually presents a lower volatility. From the point of view of the overall institutional investors do play a certain role in stabilizing the market. In the phase of the rise in the market, the trading behavior of institutional investors has further exacerbated the volatility of the stock market, but when the market is declining, the institutional investors through its gone against the tide of buying behavior to reduce the volatility of the market. At the same time, the experimental results also show that the institutional investors to buy stocks usually get higher returns, but this is not evident in the performance of the holding period of the stock. Therefore, this paper also recommends that individual investors try to choose expert financial management, because the tracking Fund announced quarterly data missed the best time to help them share the fund’s investment income.