Research On The Relationship Between Institutional Investors,R&D Capability And Company's Performance

Xi's report to 19 th CPC National Congress pointed out that innovation is the first driving force in leading the development of society today.Only when we insist on the way that constructs the nation by innovation and high technology,will we be outstanding in the new era of rapid development.In China,high-tech enterprises have become the core force to promote high-tech innovation.The high-tech enterprises listed on the GEM of China are even more outstanding and representative of such enterprises,with more prominent research and development capabilities and market potential.In the capital market,as a professional investment institution,institutional investors not only provide enterprises with financial support,but also exert some influence on corporate governance and business management as external factors.Both R&D investment and patents reflect the capability of R&D.R&D investment shows that enterprises' emphasis on innovation and investment,while the patent,as the final achievement in research,is the capitalization part of R&D investment.Besides,company's performance measurement is usually used to examine the business results of the enterprise,that is,to combine financial performance with market performance.Based on this,the article selects 161 GEM high-tech enterprises from 2011 to 2016 as the samples,and studies the relationship between high-tech enterprise's performance and institutional investors holding and R&D capabilities by means of empirical analysis.Firstly,this paper makes the normative research based on related literature at home and abroad,some definitions of concepts involved in this paper and theoretical basis.Then,the paper puts forward two hypotheses according to the operation performance and market performance,and establishes two models for the hypothesis of verification: operation performance model and market performance model.These models mainly used to explore the impact of institutional ownership,R&D investment intensity and patent on the performance.Finally,the paper uses empirical method to verify the above two hypotheses and gets the results.Empirical test results show that,in the business performance model,the proportion of institutional investors and the patent factors are significantly and positively correlated with the business performance,while the R&D investment is negatively correlated with the business performance.It's indicate that institutional investors have a positive impact on business performance in corporate governance and financial support which can promote the development of enterprises;the more and more diverse patents an enterprise has,the more profits the enterprise can make;however,the R&D investment will increase the cost of current year than the profit will decrease.In the model of market performance,there is a significant positive correlation between the institutional shareholding ratio,R&D investment and the degree of market performance,but the influence of patent factors is not significant.Institutional investor can trigger the Herd Effect,which means other investors' irrational imitation will leads to unfair market price.Besides,investors often overestimate the future operating returns of R&D investment and overvalued stock prices.According to the empirical results,this paper provides some suggestions.