Correlation Study on Institutional Investors and Corporate Performance

In the past decade, the institutional investors of china has a rapid development, and they have replaced the individual investors as the main capital market investors. An important goal to develop institutional investors is to play its role in improving corporate governance. In 2006, CRSC issued governance guidelines of the listed companies in China, article 11 clearly states: Institutional investors should play an important role in electing company directors, making major decisions and supervising company excutives. So whether institutional investors of China can play its role in improving the corporate governance, thereby improving the corporate performance? If so, in what extent can it play a role? If not, then constraint to what factors? In this paper, combined with theoretical analysis and empirical research, we analyse the behavior of institutional investors to participate in corporate governance, and the influence of the corporate performance. Following major elements:Chapter 1 is an introduction. Including the background and significance of this paper, literature review, concept definition, major research contents and innovations.Chapter 2 and chapter 3 are theoretical analysis. Firstly, analyses the mechanism of institutional investors participate in the company. Including why institutional investors choose to participate in corporate governance, the way institutional investors choose to participate in corporate governance,and analyze the behavior of governance from economic perspective. Secondly, the paper analyzes the institutional investors involved in corporate governance will how to affect firm performance. Thereby make a theoretical support to the research.Chapter 4 and chapter 5 are empirical research. The paper selectes data of these companies from 2007 to 2009 in A-stock market in China as research samples, and represented by securities investment funds, and choose INS、INZ as explanation variables, Tobin’s Q, CROA, ROA as dependent variables, make empirical research on the relationship between the institutional ownership and the performance of listed companies.Chapter 6 is the conclusion. Based on theoretical analysis and empirical research, the paper make some suggestions about the current situation of corporate governance and institutional investors.The mian results of the paper are: (1) The proportion of institutional shareholding and corporate performance are positively correlated, the higher proportion of institutional investors holding, the company has a better level of performance. (2) Power balance with institutional shareholding and corporate performance are also significantly correlated. The larger proportion of institutional shareholding to the controlling shareholder, the more institutional investors in corporate governance to compete with the controlling shareholders. Thereby reducing the controlling shareholders against the interests of minority shareholders.