The Influence Of Institutional Investors' Shareholding On The Downside Risk Of Stock Prices

Compared with the foreign capital market,China's capital market started late,and the development is still not perfect.Stock price volatility is a normal phenomenon in the capital market,but the abnormal downside of the company's stock price will adversely affect the various entities of the market: first,it will lead to the impairment of investor assets,forming a panic market atmosphere that is not conducive to investment;secondly,it will negatively affect the company's goodwill.The impact will reduce the company's market value and reduce investors' expectations of the capital market;in the end,it will also cause mismatching of capital market resources and slow down the development of financial markets.Therefore,the issue of stock price downside risks has become the focus of attention from all walks of life.Foreign investors have significantly reduced the downside risk of stock prices through the development of institutional investors.Inspired by this,China's regulatory authorities have proposed to promote the development of institutional investors,and the scale of institutional investors in China's securities market continues to increase.Due to the differences between China's capital market and foreign capital markets,it is of great practical significance to study whether the holdings of institutional investors in China can reduce the downside risk of stock prices.This paper collects the data of 1125 listed companies from 2006 to 2017,using the stock price as the research perspective,using the literature analysis method,qualitative analysis method and quantitative analysis method,based on the theory of herding effect,short-sight behavior theory,efficiency supervision theory and strategic cooperation.The theory expounds the influence of institutional investors' shareholding on the downside risk of stock price.It uses two proxy variables to replace the stock price downside risk.After testing the correlation between the two proxy variables,the proxy variable is used as the explanatory variable.The effect model is separately regression,and the impact of institutional investors' shareholding on the downside risk of stock prices is analyzed.The conclusions of this paper are as follows:(1)For a listed company,as the shareholding ratio of institutional investors increases,the risk of the company's stock price declines gradually;when the institutional investor's shareholding ratio is small,other conditions Under the same circumstances,the risk of the company's stock price decline gradually increased.The advantages of institutional concentration of shareholdings outweigh the disadvantages,and the CSRC should continue to strengthen the strength of institutional investors in the capital market.(2)The increase of the asset-liability ratio will increase the downside risk of the stock price,but as the shareholding ratio of institutional investors increases,the downside risk of individual stocks due to the asset-liability ratio can be mitigated.It shows that companies with high asset-liability ratios increase institutional investors' shareholdings in favor of lowering stock price downside risks.(3)The fact that there are more bubbles in the stock price will increase the downside risk of the stock price,but as the shareholding ratio of institutional investors increases,it can promote the company's stock price to return to rationality and reduce the downside risk of individual stocks.Companies with high market-to-book ratios increase the holdings of institutional investors to help reduce the downside risk of stock prices.Finally,combined with the results of empirical research,the policy recommendations for institutional investors are proposed.