An Empirical Analysis Of The Impact Of Institutional Investors On The Governance Of Listing Corporation

The development and growth of institutional investors is an important factor of a healthy and stable securities market. Based on the analysis of institutional investors to participate in the management of listing corporation, this paper will make a research on the specific impact of institutional investors on the listing corporation’s operating performance and financial risk from the perspective of agency theory.Firstly, the article introduces the specific content of the agent theory. On this basis, the institutional investors, individual investors and listing corporations have dual agency relationship. Because of institutional investors are proxy intermediary, this makes the operating performance and risk level of a listing Corporation change greatly.Secondly, after introducing the agent theory and the existence of the dual agency relationship, this paper will explain the reasons for individual investors as an agent and the reasons for participating in corporate governance. Then make an introduce of the institutional investors how to participate in listing corporate governance. And make an analysis of the institutional investors’role--whether improving the company’s financial performance and whether reducing the risk level. The empirical research method in this paper is mainly based on linear regression analysis. To measure the corporate performance level, this paper will use ROA (rate of return on total assets) and EPS (earnings per share) as a measure of standards. To measure the level of risk, this paper will use financial risk which is measured by degree of financial leverage.Finally, on the basis of empirical research conclusions which is drawn by this paper--institutional investors participate in the management of the listing corporation could improve the target corporation operating performance and effectively reduce the agent risk. Based on the summary of the full text of the article, this paper will put some reference opinions for the development of institutional investors.The innovation of this paper is making an analysis of institutional investors as a proxy intermediary in the governance of listing corporation from the perspective of agency theory. In the empirical study part, the control variables are introduced comprehensively and the company’s financial risk is measured as the agent risk in listing corporation governance.Of course, this paper also has many shortcomings. First of all, the research on the institutional investors to participate in the management of listing corporation mainly focus on the company’s financial performance, some qualitative indicators, which like brand loyalty or customer properties are not included in the empirical research results. Secondly, the data in this study is used of2013data, and the proportion of institutional investors holding or the number of institutions throughout the year are not completely invariant. Furthermore, the study object of this paper is mainly about the shareholding proportion of securities investment fund. Finally, the empirical process in this paper is mainly static analysis, which is lack of a reasonable and effective explanation for a number of years. In the future research, selecting a stable circumstance and using the data of many years could reflect the overall trend of listing corporate governance.