Research On Restraints Of QFII On Tunneling In Listed Companies

Since the establishment of QFII system in 2003,the SFC has provided the QFII more and more favorable policies,such as the decline in access threshold,the expansion of investment and the relaxation of investment quotas.With the gradual relaxation of the policy,more and more QFII holds the shares of our listed companies.QFII is a kind of institutional investors with abundant funds,independent position,and experienced investment team.Does QFII can effectively participate in the governance of listed companies in China to reduce the tunneling of large shareholders and protect the interests of small and medium investors? This article attempts to answer this question and explore the inhibitory effect of QFII on tunneling.In this paper we theoretically analyze the shareholding of QFII to suppress the tunneling of large shareholders,based on the review of the researches of the tunneling of controlling shareholders,the researches of the effects of institutional investors' participation in corporate governance and the related researches on QFII.We found that the limitation of shareholding proportion of a single QFII in China's QFII system makes shareholding of QFII closer to the small shareholders,so that in order to safeguard their own interests QFII has motivations to suppress the tunneling of large shareholders.QFII is more dominant in scale of investment,information access and processing and corporate governance,so it has the ability to curb the big shareholders' tunneling.In addition,QFII can curb large shareholders' tunneling through private negotiations,being the board of directors,and attending the shareholders' meeting.Then,via the fixed model of panel data,we use the listed companies of Shanghai &Shenzhen Stock Markets from 2012 to 2015 as samples to analyze the suppression effect of QFII on the tunneling of large shareholders.The results show that QFII holdings can significantly reduce the degree of tunneling of large shareholders in the listed companies.Using the QFII shareholding ratio at the end of the year to measure the inhibitory effect will be more significant than the average holding ratio of QFII,which may be related to QFII's exercise of power through the shareholders' meeting.And the effect of QFII on the tunneling is significant in state-owned listed companies,but not in private and foreign-listed companies.In the end of this paper,we made recommendations from three aspects of perfecting the relevant legal construction,improving the information disclosure system and extending holding limitation of QFII.