A Study On The Impact Of Institutional Investors’ Shareholding On China’s Stock Price Volatility

China’s stock market has made rapid progress since its rise in 1990s,but its level of development is not yet mature.With the pronounced market volatility and the quick dissemination of information in the Internet age,institutional investors that are on the side of information asymmetry that benefits from it frequently employ positive feedback trading tactics,that is,chasing up and murdering down makes the stock market more volatile.It increases the likelihood of systemic financial hazards and is particularly unfavorable for the steady and healthy growth of the Chinese stock market.Therefore,the relationship between institutional investors and stock market volatility has been thoroughly tested,which is beneficial for understanding the process of institutional investor development in our country,aids the investor in determining the worth of the investment more accurately,furthermore offers the recommendation for a reference to the associated supervisory department,which promptly foresees investor illogical transaction conduct and its effects on the stock market.Based on relevant data of listed companies owning principal shares of 473 A shares in the years 2016-2020 applying a complex OLS regression model and a fixedeffects regression model,we established indicators such as shareholder ratio,turnover ratio and market capitalization of different types of investor institutions and used the deviation Standardized all daily returns in quarter t as a basis for measuring institutional investors’ investment behavior.Meanwhile,institutional investors have conducted different stock market volatility analyzes with different investment preferences in different markets,types and sectors.The findings indicate that:(1)Stock price volatility is inversely correlated with institutional investor shareholding ratio.The abnormal volatility of the stock market has increased as a result of institutional investors’ trading tactics,as reflected by investment funds for securities.(2)Effects of volatile stock prices fluctuate significantly depending on the type of institutional investor.The stock market’s volatility will increase with ownership stakes held by pension funds,government agencies,and other institutions dealing with investments in securities,but it will decrease with the ownership of insurance firms.(3)Under diverse market conditions,institutional investor ownership of shares has varying effects on stock price volatility.Institutional shareholders’ ownership of stock will often enhance market volatility in a bull market,but securities investment funds and insurance companies’ ownership of stock will reduce volatility in stock prices and stabilize the capital market in a bear market.This study therefore argues that our nation should appropriately direct institutional investors’ investment strategy,optimize institutional investors’ internal organization,encourage institutional investors’ development into a diversified group,in order to lessen numerous anomalous swings in the stock market,avert and minimize financial risks,and encourage the enduring and steady operation of our stock market.