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Analysis of the factors of institutional investors affect the information disclosure of listed companies

Author: ChenXiaoLi¡¡SongXiaoNing¡¡LouZuo From: www.yourpaper.net Posted: 2009-10-15 01:51:39 Read:
[Abstract] In this paper, the cross-sectional data of 447 listed companies in 2005 samples were investigated concentration of institutional investors in equity shares liquidity of listed companies' information disclosure relationship. The study found when the Option excessive concentration, the role of institutional investors information disclosure of listed companies will be reduced, or even lose their effect. The increase in the proportion of tradable shares will be conducive to information disclosure of listed companies after the split share structure reform, institutional investors will have improved role in the ability of the company information disclosure.
[Keywords] institutional investors; disclosure of information; equity concentration; liquidity

Since the 1980s, an outstanding performance in the global financial markets, the rapid development of institutional investors 1. Institutionalized to promote the financial markets mainly oriented sector-led shift from traditional commercial banks to expand the functions of the financial markets, and improve the efficiency of the financial markets and national competitiveness. In 2004 the State Council on promoting the reform and opening up of the capital markets and the steady development of certain opinions "that, to further promote the development of the listed companies hope to improve the structure of China's stock market investors, through the involvement of institutional investors. The scale of China's securities investment funds to grow steadily, the QFII pilot gradually enlarged, insurance funds, pension funds and corporate the annuity investment capital market has made important progress in the initial formation of a wide range of institutional investors, investment patterns. As of the end of March 2006, the number of fund management companies reached 54, the total size of the investment funds reached 476.846 billion, accounting for 14.4% of the market capitalization of the Shanghai and Shenzhen market value of the fund's holdings. Authorities had approved a total of the 35 QFII qualification and the $ 5.97 billion investment quota. Institutional investors by virtue of its strong financial strength, not only in the secondary market, stock trading, more as a positive shareholder identity through the implementation of the corporate governance institutions shareholders regulatory.
Investor behavior as a shareholder can not interfere with the listed company information disclosure decision-making has become a consensus, and this intervention is as the leading institutional investors. Relative to the general investors, institutional investors are often considered to be sophisticated investors, have more assets and greater ability to invest, with the scale of funds, low-cost, portfolio investment, financial experts, and improve investment efficiency, control investment risk service, high and stable income, have an advantage in access to information, company mergers and acquisitions, investment enterprises tend to exert an important influence (Hand, 1990; Kim, Krinsky & Lee, 1997; Bartov, Radhakrisnan & Krinsky, 2000). On one hand, institutional investors can clearly determine the pros and cons of the listed companies and is recognized in accordance with the true value of the company stock price, in order to guide the effective allocation of resources, reduce stock market bubble, increased stock market stability. Institutional investors, on the other hand, by virtue of their professional advantage, to participate in corporate governance, operating more standardized and effective of the listed companies. Therefore, the discussion investors affect the core of the company's information disclosure issue is the relationship between research institutional investors and company information disclosure. Under the current situation, the study of institutional investors on the company information disclosure, for the improvement and development of China's securities market, and to increase the transparency of information, and its significance is undoubtedly profound.
So far, more literature from information theory, corporate governance, market competition angle of the various factors affecting the decision the company information disclosure behavior (Potter, 1992; Rajgopal, 1998; Santanu, 2003), but also a lot of guiding the relationship of information disclosure and market efficiency (Lang & Lundholm, 1993; Buchee, 2000), but still does not exist a core paradigm alone, comprehensive, profound analysis of the behavior of institutional investors and corporate information disclosure both role. This article aims to do in the field of Exploration, the combination of empirical data and experience demonstrate to discuss the relationship between China's institutional investors with the information disclosure of listed companies and its influencing factors.

Empirical research hypothesis and design

(A) The research hypotheses
In this paper, the actual situation of our country, were discussed from the perspective of equity-type the equity concentration of institutional investors, the liquidity of the shares the impact of information disclosure of listed companies.
Institutional investors ownership concentration and corporate information disclosure
Ownership Concentration is an indicator of the degree of ownership concentration in the measure of the listed company's share capital structure, usually with the first few largest shareholding ratio is calculated according to a formula. We believe that equity moderate concentration of interest arising from the convergence effect to a certain extent, the controlling shareholders and minority shareholders interests of consistency, there is conducive to the enhancement of the efficiency of corporate governance, but the excessive concentration of equity interest arising from encroachment effect, the controlling shareholder may to pursue their own interests at the expense of the interests of the other shareholders.
Ownership concentration is conducive to scholars, such as the information disclosure of listed companies McKinnon and Dalimunthe (1993), as well as Mitchell et at. (1995) that the relationship between the dispersed shareholding Segment Information Disclosure weak correlation to support institutional investors, institutional investors affect the mechanism of internal (hand vote), the concentration of institutional investors in equity will be reduced by the cost of its intervention to improve intervention effect will eventually enhance its impact. Agency theory that the more dispersed shareholding, the greater the possibility of operators to infringe on the interests of investors, moderate concentration of the equity will be conducive to the disclosure of company information (Cuixue Gang, 2004). Shleifer and Vishny (1986) model shows that large shareholders with economic incentives and the ability to restrict management shareholders' expense, to serve their own interests behavior can more effectively monitor the behavior of managers to take over the operation of the market helps to strengthen reduce agency costs.
More scholars believe that the institutional investor ownership concentration is not conducive to the public information on listed companies. Fama and Jensen (1983), when the options were widely held, the potential principal-agent conflict will occupy concentrated than equity to a large, widely held equity level of information disclosure will be better than the level of disclosure of information held centrally. Bipin (2005) that when corporate ownership concentration is a small number of institutional investors to grasp, these institutions will be in a higher degree of control of the company's governance, would inevitably result driven by the personal interests of other institutional investors as well as other small and medium damage to the interests of shareholders; Porter (1992) believe that such institutional investors to more easily obtain private information, Therefore, in order to obtain greater income, the power of institutional investors will be to some extent prevent the company for public disclosure of information to get relative to comparative advantage in the market; Bipin (2005) demonstrated that the institutional investor ownership concentration and profitability of listed companies forecast information disclosed in the accuracy of the disclosure of an inverse relationship between the tendency. Barclay & Holderness (1992), Huddart (1993) also study reached similar conclusions.
Based on the above analysis, we hypothesized:
H1: the increase of the concentration of institutional investors in equity will hinder the information disclosure of listed companies, the higher concentration of institutional investors in equity companies, lower transparency rating levels.
The shares liquidity of company information disclosure
Structural problems in the capital market, the "split share" is a phenomenon unique to China's stock market. Before the split share structure reform, when the non-tradable shares accounted for the majority of the total number of shares of the shareholders of non-tradable shares will be dependent on its controlling position and nature of equity, access to large amounts of information through the company's internal. But in a healthy capital market, the role of tradable shareholders on corporate governance is crucial, they affect the value of the company by the stock market price signals and take over the control function. In order to give full play to the role, they must get a lot of the company's financial position, results and future strategy, strong demand for information, in turn prompted the company to disclose more information. With the improvement of the liquidity of shares, the room of the role of institutional investors in the capital market will correspondingly increase, accordingly, we have established that the assumptions:
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