The Research Of The Impact Of Institutional Ownership On The M&A Activities Of Chinese Listed Company

The institutional investors’impact on corporate governance has long been a dialogue among different scholars. We reviewed the boarder definition of corporate governance, agency theory and stakeholder theory as the theoretical basis for this topic. Also we had a review and made a conclusion about previous papers regarding institutional investors’role in different aspects of corporate governance. Based on those two parts of literature review, we figured out the mechanism of how the intuitional investors influence the companies’corporate governance. Together with the process analysis of the M & A activities initiated by the Chinese listed companies, we analyzed the impact of institutional investors during different stages. Based on that, we made six hypotheses to predict the institutional investors’impact on companies M & A activities. Accordingly, we designed our research with the corresponding variables, one logistic regression model and three multiple linear regression models to test our hypotheses.We chose 790 M & A activities happened between 2009 and 2011 in the A share stock market of China as our samples. We recognized tunneling M & A and propping M & A in our sample by certain methods. Based on our later empirical analysis and corresponding discussion, several conclusion were put forward:(1) The institutional investors are not able to stop the insiders tunneling from the listed companies by M & A activities, mostly due to their absence of the companies’boards. (2) The institutional investors could lower the total payment of tunneling M & As as the insiders are afraid institutional investors’power in the media, stock market, etc. (3) The institutional investors are able to recognize the tunneling M & A and accordingly give a worse feedback in the stock market, which made a worse market performance for those M & A. (4) The ownership of security investment fund and QFII is positively related with the better accounting performance of the companies after the tunneling M & As, indicating their efforts to influence and monitor those companies.