Research On The Impact Of Institutional Investor Activism On Corporate Performance

The emergence of institutional investor activism in western countries began in the 1980 s.As institutional investors continue growing,shareholder activism has been further developed.In 2001,the policy of “rapidly developing institutional investors" was published in China.With the continuous progress of China's capital market,institutional investors are playing a more and more important role in the market.In recent years,China has seen many cases of institutional investors participating in corporate governance and their role as “active investors” to maintain the interests of small and medium-sized shareholders.To achieve long-term benefits,institutional investors actively participate in corporate governance and enhance corporate performance.This behavior is known as institutional investor activism.However,whether the activism can improve corporate governance and affect the performance of the company remains controversial around the world.Therefore,it has a profound significance for the corporate governance in China and the future development of institutional investors to study the impact of the active behavior of institutional investors.In this paper,the influence of institutional investors' activism on the corporate performance is systematically analyzed by combining theoretical research and case studies.The current status,motivation,and performance of the institutional investor's activism are theoretically analyzed in this paper.Based on the comprehensive understanding of institutional investors' activism and trust agency theory,it is inferred that institutional investors are raising corporate profits by reducing agency costs.According to the process of the incident,a detailed introduction was given to the case of institutional investors activism in Dashang Co.,Ltd.The multiple causing factors and the conflicts of interests between major and minor shareholders are analyzed in the aspect of company's assets and equity structure.Finally,the influence of institutional investor activism on the profits of the corporates is evaluated by comparing the changes in corporate governance structure and financial data during the period.It is concluded that in the long term,the institutional investor activism can optimize the governance structure of the listed companies in terms of equity structure,board structure,and internal governance system,and has a positive impact on the profits of the companies.