The Impact Of Institutional Investors' Shareholdings On M&A

Researchers at home and abroad have made abundant studies on the relationship between institutional investors and M&A.However,due to the lack of domestic data,the research in this field is relatively few.This paper chooses 1914 M&A cases in A-share market from 2012 to 2017 as research samples.This paper mainly studies the following two aspects.One is the impact of institutional investors' characteristics on corporate M&A decisions.The other is the relationship between institutional investors' characteristics and the returns of all investors.The research focuses on three aspects of institutional investors' shareholding,including proportion,concentration and stability.The results show that the larger the proportion of main institutional investors,the stronger the stability of their shareholdings and the higher the concentration of their shareholdings,the greater the possibility of M&A expansion.Moreover,M&A expansion can indeed bring positive abnormal returns to investors.But paying more doesn't guarantee more returns.Specifically,the higher the proportion of main institutional investors and the stronger the stability of their shareholdings,the lower the CAR of the company's stock in the window period.The possible reasons are as follows: One is the "selective reduction" of institutional investors with large shareholdings when the good news is announced.The other is that institutional investors with stable shareholding have low risk preference when choosing the target.The increase of institutional investors' shareholding concentration is conducive to the increase of CAR in the window period,and can ensure that the stock price is relatively stable in the later period.The possible reason is that the increase of institutional investors' shareholding concentration reduces the cost of collective action and improves the influence of collective action.There are two main contributions in this paper: First,on the basis of previous studies,this paper pays extra attention to some other characteristics that affect M&A.These characteristics include the proportion of single institutional investors,the characteristics of long-term and short-term institutional investors,and the degree of shareholding concentration.In addition,institutional investors have information advantages and professional competence.Therefore,they may use insider information in the process of monitoring or "participating" the company.So the second contribution of this paper is that it provides a good perspective for regulators to carry out insider trading supervision.The innovation of this paper includes three points: Firstly,this paper examines the impact of single institutional investors on corporate M&A in A-share market.The paper finds that the institutions with a large share-holding ratio have a major impact on M&A.Secondly,this paper uses the change rate of shareholding to indirectly examine the different impacts of long-term and short-term institutional investors on corporate M&A.Thirdly,to some extent,this paper proves the relationship between the concentration of institutional investors and the cost of collective action.