A Research On The Influence Of Institutional Investors Heterogeneity On GEM Companies’ Innovation

Currently, China’s economic growth is being threatened by the global financial crisis as well as the dual challenge posed by sustainable development. Innovation becomes an important driving force for the development of China economic. GEM set up to providing development platform for the enterprises’innovation, and to providing the driving force for China’s economic growth, therefore, it is necessary to research the GEM-listed company’s innovation ability. Ownership structure, board structure, managers motivate etc. internal governance mechanisms are made through innovation, which affect the company’s capability of innovation. In recent years, institutional investors holding share is increasing in China and the market status are rising. Institutional investors as an important source of external governance arrangements are actively involved in the company’s internal governance, though the way of "vote by hand", focused on corporate performance and long-term value, the fluency on company innovation cannot be ignored.In the above context, this paper first reviews the literature associated with this study, and based on behavioral finance theory and principal-agent theory, from the perspective of heterogeneity of institutional investors to establish a company’s management innovation decision making game model, discuss the different effects of different types of institutional investors affect the company’s innovation. Secondly, select the2009-2012GEM stocks held by the fund for samples, then take portfolio concentration, ap>petite for risk, and portfolio turnover three index classified funds as risk aversion long-term and risk appetite short-term institutional investors. Finally, choose the GEM-listed company in our country2009-2012data for samples, with R&D inputs and the number of patent applications as innovation inputs and outputs as agent variables, take holding fund nature of dummy variables for the heterogeneity of institutional investor proxy variables, using panel data for empirical test of effect of institutional investors heterogeneity to GEM companies innovation acts. Results show that the overall shareholding of institutional investors have significant positive influence on the companies’innovation inputs and outputs; risk aversion long-term institutional investors have negative correlation with corporate innovation inputs and outputs; risk appetite short-term institutional investors and corporate innovation inputs are related and unassociated with outputs. Analysis of the adoption of the conclusions, future policy concerns raised in this paper should focus on strengthening the support and supervision of institutional investors and develop its long-term investment philosophy, further play an active role of participating in corporate innovation.