The Influence Of Institutional Investors’ Holding On Stock Price Volatility

The sharp fluctuation of stock price will have a great negative impact on the operation of the whole market and the market participants.The relative stability of stock price needs a mature and sound financial market system and rational and mature qualified investors.In recent years,with the rapid development of China’s economy,the investment and financing role of the securities market plays an important role in economic development,and the stable and healthy operation of the secondary market is essential.Due to the rapid and even rough development of China’s stock market,the relevant supervision lags behind,the stock price fluctuates violently from time to time.In the second half of 2014,China’s A-share market began to rise slowly.Since the end of 2014,China’s stock market has been rising rapidly throughout the first half of 2015.After a long-term rise,the Hu Shen 300 index reached a high of 5380.43 in mid June 2015,and the index began to turn down sharply.The index plummeted to around 3200 in early July and nearly 40% in two weeks.The sharp rise and fall in share prices have had a huge negative impact on all trades and industries.What role did institutional investors play during this period?Institutional investors have developed rapidly and will hold 47.7% of the shares by 2018.The categories of institutional investors are also increasing and improving.China already has professional institutional investors such as funds,insurance and qualified overseas institutional investors.Institutional investors have already occupied a pivotal role in the stock market.Therefore,as a major participant in this market,whether institutional investors are stabilizers to restrain sharp fluctuations in stock prices or the initiators of sharp rises and falls in the stock market has always been worth discussing.Determining the impact of institutional investors on stock price fluctuations can provide reference for the future development of institutional investors in China and the formulation of relevant regulatory policies.Through literature review,it is found that although previous scholars have done a lot of research on stock price fluctuation by institutional investors,it has certain reference value for the current research in this paper.However,most of the previous studies used funds to refer to all institutional investors.This is because at the beginning of the development of institutional investors in China,funds were the most important institutional investors in China,and other types of institutional investors started late.However,the scale of other institutional investors has developed rapidly and has played an important role in the market.Therefore,this paper chooses all professional investors as the research object and the sum of the shareholding ratios of various professional institutional investors as the explanatory variable.At the same time,based on the background of different market conditions in China’s stock market around 2015,the influence of institutional investors on stock price fluctuation is explored by distinguishing the rising,falling and oscillating phases of the market.Referring to Cai Qingfeng’s research on fund institutional investors in 2010,the conclusion of the model is made more universal by examining the two control groups of institutional heavy stock and institutional non-heavy stock respectively.First of all,this paper analyzes the mechanism of institutional investors’ influence on stock price.The characteristics,trading behavior and supervision of institutional investors will affect stock price fluctuation.Different factors have different influence directions.Then,the empirical analysis theory of the impact of institutional investors on stock price fluctuation is obtained from the empirical data.Next,this paper makes corresponding empirical analysis on the basis of theoretical analysis and empirical analysis,the top 150 and the bottom 150 A-share listed companies in the three stages of stock price rising,stock price falling and stock price shock are selected as the research objects.It distinguishes the impact of institutional investors’ holding on the volatility of stock price in the rising stage,the falling stage and the concussion stage.The empirical results show that the proportion of institutional investors’ shares is positively related to the volatility of stock price,and institutional investors’ shares aggravate the volatility of stock price.On the one hand,the transaction amount of institutional investors is large,and some strategic positions will cause stock price fluctuations.On the other hand,the rapid development of institutional investors in China,the imperfect regulatory policy system of institutional investors makes some institutions play a role in promoting stock price fluctuations.When the stock price fluctuates,institutional investors frequently adjust their positions,buy low and sell high to earn income,and the fund’s charging mode and the investment manager’s pursuit of their own interests lead to institutional investors’ increasing the impact of stock price fluctuations.In the stage of stock price rising and stock price falling,the regression results of the top 150 institutional investors show that institutional investors’ stock ownership is positively correlated with stock price volatility,while there is no significant correlation between the top 150 institutional investors’ stock ownership and stock price volatility.To a certain extent,the rational value investment of some institutional investors plays a role to restrain the impact of increasing stock price volatility when the stock market is unilateral.the institutional investors who hold less shares have less influence on the stock price.According to the results of theoretical analysis,empirical analysis and empirical analysis,the last part puts forward the problem that institutional investors do not stabilize the market as expected,and analyzes the causes of this phenomenon from institutional investors themselves,relevant systems and supervision.Finally,based on the research conclusions,it gives feasible policy recommendations.