The Impact Of Institutional Investor's Shareholding On Public Performance,Risk And Sustainable Profitability

Generally speaking,the development of institutional investors is one of the important criterions to measure the level of a capital market.In recent years,with strong support from the government,China's institutional investors have made tremendous progress in shareholding ratio,market participation and influence.As a result,institutional investors are gradually replacing individual investors to become the leading force in Chinese capital market.This paper focuses on listed companies of both Shenzhen and Shanghai Stock Exchange,and it analyzes the impacts of institutional investors from three perspectives-company performance,risks and sustainable profitability,so as to provide references for regulators,investors and listed companies.The paper designs models to stimulate the relationship between the three groups by using Ordinary Least Squares with 2016 annual data due to the stability of shareholding structure.Meanwhile,this paper selects CROA,BETA and SIGMA,CON to represent variables.According to the statistical results,the paper illustrates that institutional investors holding has a positive co-relation with company performance,a negative relationship with risks and no significant co-relation with sustainable profitability.Such conclusions remain reliable when controlling the endogeneity.Thus,the increased institutional investor holdings improve company performance,reduce risks,and do not have profound effect on sustainable profitability.The paper has three innovations.First,it considers two elements-both earnings and risks-simultaneously in order to avoid the incompleteness of a single-factor analysis.Second,this paper not only introduces the sustainable profitability,but also tests the long-term impact.Third,this paper enhances existing models with certain modifications.