Research On The Impact Of Institutional Ownership On The Downward Risk Of Stock Price

The stability of the stock market plays a key role in maintaining investors’ confidence in the capital market and achieving its goal of serving the real economy.Compared with developed countries,China’s stock market started late,its development is not perfect,and the downside risk of stock price remains high.The abnormal decline of stock price will not only bring heavy losses to investors,but also indirectly harm the real economy through various channels.Some scholars believe that the downward risk of stock price can be restrained by giving full play to the external governance role of institutional investors.However,other scholars’ Empirical Research on the relationship between the two points to the opposite direction,that is,China’s institutional investors have a serious tendency of "short-term opportunism",and institutional shareholding has a catalytic effect on the downward phenomenon of stock price.The difference between "institutional positivism" and "institutional negativity" is the starting point of this paper.On the basis of information asymmetry theory,principal-agent theory,herding theory and strategic collusion theory,combined with the reality of China’s capital market,this paper discusses the impact of institutional ownership on the downward risk of stock price and the regulatory effect of enterprise internal control quality and external media attention on the relationship between them,and makes corresponding research hypotheses accordingly.Based on the above,this paper takes China’s A-share listed companies from 2008 to 2020 as the research sample,and empirically tests the research hypothesis of this paper by constructing panel regression model and regulatory effect model.The main conclusions of this paper are as follows:(1)under the same other conditions,the higher the institutional shareholding ratio of individual stocks,the greater the downside risk of stock price.On the whole,China’s institutional investors do not play the role of "stock market stabilizer",and institutional shareholding plays a catalytic role in the downward phenomenon of stock price.(2)The quality of internal control can play a negative regulatory role in the relationship between institutional ownership and downward risk of stock price.That is,good internal control quality can reduce the positive impact of institutional ownership on the downside risk of stock price.(3)Media attention can play a negative regulatory role in the relationship between institutional shareholding and downward risk of stock price.The higher the media attention,the smaller the positive impact of institutional ownership on the downside risk of stock price.Finally,this paper makes a robustness test by adding control variables,logistic regression and adjusting the sample observation interval.The test results show that the research conclusion of this paper is still valid.On the basis of the above research conclusions,in order to maintain the stability of the capital market,this paper puts forward corresponding suggestions from the government,institutional investors and enterprises.From the perspective of the government,relevant departments should constantly improve the capital market laws and regulations to reduce the violations of institutional investors and the company’s management.From the perspective of institutional investors,institutional investors should constantly improve the internal performance evaluation system,abide by advanced industry concepts and professional ethics,and practice the value investment concept.From the perspective of listed companies,listed companies should constantly improve internal control and actively accept external supervision,so as to prevent the occurrence of downward stock price.