Research On The Impact Of Institutional Investors' Holdings On Earnings Persistence

With China's economic development entering a new stage,listed companies no longer only focus on speed development,but also pay more attention to high-quality sustainable development in the new era.Stakeholders also pay more attention to the quality level of earnings information disclosed by listed companies,which is called earnings persistence.Earnings persistence measures that the earnings situation can continue to the level of the next year.Investors predict the level of earnings by analyzing this indicator.As we all know,A-share market is a market dominated by retail investors.Compared with individual investors,institutional investors have a professional analysis team and can correctly study and judge the value of the invested company.In addition,institutional investors tend to focus on the long-term value of the enterprise,the operation and earnings quality of the invested company,and more on the sustainability of the earnings of the listed company.China began to introduce the concept of institutional investors gradually in 1997.After continuous development,the types of institutional investors are more abundant,and the strength of institutional investors is more powerful in the A-share market.Since institutional investors are only external institutions of corporate governance,the degree of participation in corporate governance depends on the size of the discourse power,which is determined by the shareholding ratio.Therefore,we conjecture that the impact of institutional investors on earnings sustainability depends on the level of shareholding ratio,and there are also differences in the impact of the change direction of institutional investors' shareholding ratio on the quality of corporate earnings.Based on this,this paper expounds principal-agent theory,stakeholder theory,information asymmetry theory.This paper selects A-share listed companies in Shanghai and Shenzhen from 2012 to 2018 as the research object.We used Stata11 for data processing and analysis.This paper studies the relationship between institutional investors and earnings persistence from three perspectives.First,take whether there is a virtual variable of institutional investors as the independent variable,and then we study the relationship between them.Second,take the continuous variable of shareholding ratio as the independent variable,and then we explore the relationship between them.Third,take the dummy variable of the change direction of shareholding ratio as the independent variable,and then we study the relationship between them.The results show that there is a significant positive correlation betweeninstitutional investors and earnings persistence,from both static and dynamic perspectives.Enterprises with institutional investors have higher earnings persistence.The larger the proportion of institutional investors,the higher the persistence of the invested company's earnings.Institutional investors increase their shareholding ratio in the current year,the more effective the supervision management is,the higher the supervision level is,the better the earnings persistence of the invested enterprise is.Moreover,the influence of institutional investors' holding behavior on the persistence of accounting is significantly greater than that on the persistence of cash flow earnings.Finally,this paper puts forward some suggestions and measures to improve institutional investors in A-share capital market.Through optimizing the system construction,improving the corresponding supporting measures,supporting institutional investors to enter the market,reducing the limit of shareholding ratio,guiding the transformation of short-term institutional investment to long-term institutional investment,in order to achieve the goal of improving the earnings sustainability of the company.