The Empirical Research On The Relationship Between Types Of Institutional Investors And Corporate Performance

In recent years, China’s institutional investors have developed rapidly, and occupy an increasingly important position in the capital market. Institutional investor as one of the major shareholders of the listing corporation, its impact on corporate governance issues can not be ignored. Institutional investors can exert pressure on the managers with enough voting power, can even sack the manager with the competition and take-over of agency.In that way, institutional investors can solve the problem of agency effectively. Compared with individual investors, as the third-party power between controlling shareholders of listing corporation and individual shareholders, institutional investor have scale, information and personnel advantages. It can supervise the listing corporation effectively, and solve a series of problems of governance of listing Corporation, such as equity segmentation and unreasonable equity structure, unreasonable internal control problems, big shareholders’ embezzlement violation of medium and small shareholders’ interests. since the 1990 s, institutional investors have gradually developed diversified along with the promotion of the government policy and the continuous improvement of legal and regulatory environment, and then it formed a diversified pattern in 2005. Most of the existing literature is about the overall institutional investors’ impact on corporate governance, but are there any difference among the different types of institutional investor’s impact on corporate governance and company performance? From the perspective of institutional investor’s type, this paper discusses the different types of institutional investor’s influence on corporate governance and company performance.This paper selects the securities investment fund, social insurance funds, qualified foreign institutional investors and insurance companies as the research object. This paper study the different types of institutional investor’s impact on corporate governance and company performance by using qualitative and quantitative analysis’ method. First of all, according to the related literature, this paper analyzes the motivation of institutional investor participating in corporate governance,and concludes the different impact of institutional investors on the company’s performance. Secondly, this paper defines the concept of institutional investors, and introduces the main type of institutional investors. This paper also elaborates the theoretical foundation and way of institutional investor affecting corporate governance. Finally, this paper put forward four hypotheses, and then analysis the effects of different types of institutional investors making on the performance of the company.Careful analysis yielded the following conclusion.(1)The different types of institutional investor’s impact on corporate governance and company performance is different.(2) Securities investment fund’s incentive mechanism is highly related to the performance of the company, and its political pressure is small, so it can supervise the listing corporation effectively to improve the corporate governance and the performance of the company.(3) Social insurance fund is influenced by political and social pressure, its business goals will be conflicted with the purpose of listing Corporation, so it has a negative impact on the performance of listed companies.(4) QFII has excellent independence, it can influence the corporate governance, but it is still cautious because of its relatively short period of time in the china’s market,so its impact on the performance of the company is relatively small.(5) Insurance company has a business relationship with the listing corporation, so it is lack of independence, it does not affect the performance of listed companies.The main contribution of this study lies in the following two aspects:(1) Different from the previous research about the overall institutional investors’ impact on corporate governance, this paper discusses the different types of institutional investor’s influence on corporate governance and company performance. The research results has practical significance for improving the company’s ownership structure and corporate governance, and provide theoretical basis for regulating and guiding the institutional investors. The research results also has a certain reference value for formulating different types of institutional investors’ policies and regulations.(2) It is short time of qualified foreign institutional investors entering china’s capital market, and there are difference between qualified foreign institutional investors and domestic institutional investors in the aspect of investment concept and management system, but less research is about institutional investor’s impact on corporate governance, this paper include qualified foreign institutional investors, it can enrich the related research.