The Empirical Research Of The Impact Of Institutional Investors Who Tend To Join In Corporate Governance On The Effectiveness Of Corporate Governance

Institutional investors have the advantage of owning large amount of capital,expertise and information.Relative to other small investors,they are more likely to participate in corporate governance. With the successful implementation of the split share structure reform, the number of institutional investors have been increased.They are strong enough to balance the power of controlling shareholder. Essentially,It is a oversight mechanisms for external larger shareholders to supervise controlling shareholder. It can be seen from the previous research that institutional investors are different in holding size, holding period and independence.Different institutional investors have different effects on corporate governance. Institutional investors who tend to join in corporate governance don’t have the ambition to obtain short-term arbitrage,they are likely to focus on their own and the enterprises’long-term interests. When their decisions conflict with managers,they are are more likely to use the rights of voting-by-hand.They actively participate in corporate governance through the exercise of voting rights, private consultations, submitted shareholder proposals, etc.They work as the company’s value creators and improve corporate governance efficiency to a certain extent. The purpose of this study lies in the way institutional investors who tend to join in corporate governance to surpervise managers and improve corporate governance efficiency.This study also discuss the results of positive behavior management.First, this paper reviews the domestic and foreign academic research about the influence of the behavior of institutional investors to corporate governance.Then, on the basis of clearly defined the efficiency of corporate governance and the institutional investors who tend to join in corporate governance,we recall the principal-agent theory, equity balance theory, stakeholder theory and cost-benefit theory.Finally,we continue the research from the shareholding behavior and pay more attentain to the effects on corporate governance. Because of the large number of securities investment funds,we choose them as the main components of institutional investors.The transaction history information are from December 2010 to December 2014.We select six characteristic variables from the ownership concentration, holding time and earnings sensitivity and using factor analysis method to extract features of institutional investors.Finally,we select 334 institutional investors who tend to join in corporate governance from all the institutional investors. We set up a dummy variable to measure if the company is hold by institutional investors who tend to join in corporate governance. We select Shanghai and Shenzhen A-share listed companies as samples and use descriptive statistics, principal component analysis, correlation analysis and multiple regression analysis and other methods.On the basis of analyzing the holding behavior of institutional investors who tend to join in corporate governance,we respectively measure the efficiency of corporate governance from the corporate governance structure, the company’s financial performance and the company markets.Finally,we provide the relevant policy recommendations due to the research results of this paper.