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The Empirical Study on the Institutional Ownership and Resources Expropriation by the Related Parties

Author: HuWei
Tutor: LiuXing
School: Chongqing University
Course: Finance
Keywords: Resources expropriation by the related parties institutional investors empirical research
CLC: F224
Type: Master's thesis
Year: 2011
Downloads: 95
Quote: 1
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Abstract

In recent years, with institutional investors increase the proportion of their shareholding of the listed company ,they plays an increasingly important role in corporate governance. many scholars at home and abroad do many research about institutional investors to participate in corporate governance . In these studies, most are based on perspective of company performance, but this paper do it directly from governance modes, because in China, institutional investors mainly exercise supervision over the listed company to participate in the company management, so this paper mainly do empirical research over the correlations between the institutional investors and Resources Expropriation by the Related Parties.In the empirical research ,explanatory variables institutional investors are mainly divided into: long-term institutional investors and qualified foreign institutional investors .explained variable is the Resources Expropriation by the Related Parties.Meanwhile, we separate the sample date according to equity properties,ownership structure and year, then do the regressions respectively and to test for corporate governance environment’s influence on the institutional investors’enthusiasm to participate in the company management.Meanwhile, the sample data is collected from 264 listed companies of the HuShen 300 index in the year of 2005 to 2009. The results of the study show that, When the listed company is state-owned holding company, institutional investors can affect the Resources Expropriation by the Related Parties ,When the listed company is non-state-owned holding company, institutional shares can significantly reduce the Resources Expropriation by the Related Parties, among which, the long-term institutional investors’s shareholding ratio is negetively related to the Resources Expropriation by the Related Parties, and the short term institutional investors’ shareholding ratio and the Resources Expropriation by the Related Parties’ correlations is not significant. Relative to the listed company in which the first largest shareholder has more stock,in the listed company in which the first shareholder has less stock ,the long term institutional investors’ ability to participate in the company management is more strong, and can cause more positive influence to the Resources Expropriation by the Related Parties. the long term institutional investors’ability to participate in corporate governance is better in the listed company in which the shareholder holding more than 10% is larger, and can cause more positive influence to the Resources Expropriation by the Related Parties. After the reform of non-tradable shares, the long term institutional investors’ capability to participate in corporate governance strengthened.we also found that the asset-liability ratio and the Resources Expropriation by the Related Parties is Positively related significantly, and while in protected industries, the Resources Expropriation by the Related Parties is reduced. And this paper also found that in the non-state-owned enterprises, when the Resources Expropriation by the Related Parties is very small , the long term institutional investors can significantly reduce the Resources Expropriation by the Related Parties;while the Resources Expropriation by the Related Parties is quite serious, the second to the fifth shareholders’ shareholding ratio is positively related to the Resources Expropriation by the Related Parties , it is mainly because that in the listed companies of China,the phenomenon of the first largest shareholder have most stock is a widespread phenomenon , Ownership restriction fails to have a good effect , these big shareholder may conspire with the controlling shareholder to occupy the Listed companies’ funds , the long term institutional investors and the Resources Expropriation by the Related Parties’ correlation abate,so the long term Institutional investors’ participation in the corporate governance is restrained.the above research shows that China’s institutional investors can still significantly reduce the resource expropriated by the related company. It shows that they have been able to participate in corporate governance in some degree.

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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
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