The Effect Of Institutional Investors' Heterogeneity On The Performance Of Company Merger

At present,the uncertainty events,the unforeseen risks and diversification challenges of economy happen more and more frequently.Faced with the prominent contradictions between overcapacity and demand structure upgrading,weak endogenous economic growth and financial risks in some areas,China shoulders the downward pressure.In this case,it's imperative for China to carry out economic transformation by adjusting industrial structure and accelerating the corporate acquisitions.Indirect financing,especially bank loans,is the main source of corporate finance,which provides access to more mature firms with more stable cash flow.It's impossible to realize innovation-driven development mainly depending on bank financing,and the stock market financing becomes an important factor to achieve the above goals.With the development of our capital market,especially under the support of "extraordinary development of institutional investors",the institutional investors have gradually become one of the indispensable elements which can't be ignored.A large number of literatures show that institutional investors have a positive impact on corporate governance and performance.In this paper,we discussed the effect of different types of institutional investors on the performance of mergers and acquisitions.We took a gradual step to classify the institutional investors,namely from macroscopic to microcosmic perspective.Firstly,we divided the institutional investors into independent and non independent ones according to the types of institutional investors.Furthermore,we made a classification of radical type and soundness ones in the perspective of investment portfolio turnover rate,which helps to make a better understanding of institutional investors' characteristics in china.We took the annual rate of return on net assets(ROE)one year after mergers and acquisitions as an alternative variable of long-term performance,and the cumulative abnormal return(CAR)after the M&A declaration as an alternative variable for short-term performance.In this way,we made a comprehensive study from internal and external perspectives.We chose A shares of listed companies of Shanghai and Shenzhen as samples,and made regression analysis between different types of institutional investors and acquisition performance.The conclusions are as follows.(1)The higher the proportion of institutional investors,the better the performance of M&A;(2)Independent institutional investors have a more positive impact on the M&A performance,and non independent institutional investors have a negative impact to some extent;(3)Compared to steady institutional investors,radical ones have more significant effects on M&A performance;(4)A11 types of institutional investors play a positive role in stabilizing the market.Form the above,we can verify the two functions of "value discovery" and "market stable " of our institutional investors,although there is a big gap between developed countries and China.With the relevant improved policies and regulations,we believe that institutional investors will play a key role in our economic restructuring and M&A activities.