The Impact Of Institutional Investors And Pyramid Structures On Agency Costs Of Listed Companies

In recent years,with the rapid development of institutional investors,the increasing number and scale of institutional investors and their improvement of the overall quality in our country make that the institutionalization of the investment in the stock market is becoming more and more obvious,and diversified structure is initially formed which is mainly on securities investment funds,and developing other institutional investors at the same time,such as securities companies,insurance companies,trust companies,pension fund,enterprise annuity,qualified foreign institutional investors.Compared with those individual investors,institutional investors generally have more abundant capital strength and have special departments in making decision,which are managed by experts in the securities investment.Because the money is enough,institutional investors have enough time to gather information,analyze market and judge the trend.To safeguard their own interests,they obtain enough operating situation of listed companies and use the information to make appropriate constraints for the listed company through the analysis of the data.Institutional investors' identity is special,which are different from managers,controlling shareholders and minority shareholders.They are the largest tradable shares external and have big influence on the development of the company.Their development changes the company's equity structure,and could improve corporate governance,which is shown in many foreign studies,and increasingly becomes the hot spot in the study of Chinese corporate governance.With the continuous development of economy,enterprise group is ubiquitous in capital market.As a typical emerging market countries,China's capital market is significantly different mature capital markets,in the face of the initial conditions--non-tradable shares and spin-off listed,which makes the listed companies in our country is facing more serious agency problems.According to the agent theory,the agent cost in the process of corporate governance is divided into two categories,namely management agent cost and major shareholder agency cost respectively.What are the characteristics of the governance efficiency and agency cost of listed companies in pyramid shareholding structure?As a third-party force,whether institutional investors can affect the relationship between pyramid structure and two types of agency costs?The above question has been being the "black box" in corporate governance research.This paper adopts the method of combining theoretical deduction and mathematical statistics.Using the theory deduction method analyzes the influence of institutional investors holding and the pyramid structure on the agency cost of listed companies and puts forward concrete suggestions for corporate governance.Through the methods of mathematical statistics,this paper studies the influence of the institutional investors holding and cash flow rights of ultimate control and the level of the pyramid under the pyramid structure on two kinds of agency costs of listed companies respectively.At last,this paper also studies whether institutional investors play a regulatory role between pyramid shareholding structure and agency costs of listed companies.This paper deeply discusses the influence of cash flow right of ultimate controller and pyramid hierarchy the pyramid structure on two classes of the agency cost of listed companies,which revealing the path of the pyramid structure of listed companies influencing two kinds of agent cost and uncovers the inner workings of the black box to some extent.Based on the above theory,this paper studies the influence of institutional investors and pyramid structure on the two kinds of agency cost based on the sample of A-share listed company in Shanghai and Shenzhen in 2005-2014.In this paper,the empirical results show that:first,with the rise of institutional investors holding,two kinds of agent cost are reduced,which shows that institutional investors in China can exert' their advantages,such as profession and information,playing an effective oversight role in corporate governance.Secondly,in the pyramid structure,the higher the cash flow rights held by the ultimate control person,the lower the two types of agent cost are;With the extension of pyramid level,the first type of agent cost decreases,and the second agent cost increases.Possible reasons are:pyramid level lengthens the isolation layer between the ultimate control and managers and makes the degree of information asymmetry higher.At this point,the managers of the resources of listed companies have the higher power and their decision-making efficiency are higher,which increases the company's resources operation efficiency,and then decreases the first kind of agency cost;Pyramid level deepens the complexity of the enterprise's equity structure,which offers an opportunity for ultimate controller of to encroach on the interests of minority shareholders.Big shareholders increase hollowing the interest of small shareholders,so the second category of agency cost increases.Thirdly,in the whole sample regression,the relationship between the cash flow right and the first type of agent cost of the ultimate control holder is negatively regulated by institutional investors.Fourth,in the regression of the sample,in non-state-owned enterprises,institutional investors have a positive regulating effect on the relationship between pyramid level and the first type of agency cost.In state-owned companies,institutional investors have a negative regulatory role on the ultimate cash flow rights and control the first kind of the relationship between the agency costs and have a negative regulatory role on the relationship between the pyramid hierarchy and two kinds of agency cost.