The Impact of Qualified Foreign Institutional Investors on Controlling Shareholder’s Tunneling: Evidence of Listed Companies in China
- 1 Department of Finance, Jinan University, Guangzhou, China
Abstract
Based on the data of the listed companies of Shanghai Stock Exchange and Shenzhen Stock Exchange from 2012 to 2015, we studied the impact of qualified foreign institutional investors (QFII) on the tunneling of listed companies’ major shareholders. The results show that QFII can effectively control the behavior of tunneling of the substantial shareholder of listed companies, and the inhibitory effects are different in the different ownership companies. QFII can inhibit the behavior of tunneling of the substantial shareholder of state-owned enterprises and private enterprises, and the inhibition effect is better in private enterprises. However, there is no inhibition effect on the behavior of tunneling of the substantial shareholder of foreign-funded enterprises.
- Hartzell, J.C. and Starks, L.T. (2003) Institutional Investors and Executive Compensation. The Journal of Finance, 58, 2351-2374. https://doi.org/10.1046/j.1540-6261.2003.00608.x
- Smith, M.P. (1996) Shareholder Activism by Institutional Investors: Evidence from CalPERS. The Journal of Finance, 51, 227-252. https://doi.org/10.1111/j.1540-6261.1996.tb05208.x
- Chen, X., Harford, J. and Li, K. (2007) Monitoring: Which Institutions Matter? Journal of Financial Economics, 86, 279-305.
- Coffee, J.C. (1991) Liquidity versus Control: The Institutional Investor as Corporate Monitor. Columbia Law Review, 91, 1277-1368. https://doi.org/10.2307/1123064
- Bushee, B.J. (1998) The Influence of Institutional Investors on Myopic R & D Investment Behavior. Accounting Review, 73, 305-333.
- Rama, S. and Yu, Y. (2012) Institutional Ownership and Conservatism. Journal of Accounting & Economics, 53, 98-114.
- Tang, S.L. and Yuan, C.S. (2010) Supervision or Seizure: A Study on the Role of Institutional Investor Governance—Empirical Evidence from China’s Capital Market. Manage Comments, 22, 19-29.
- Zheng, G.J. (2009) Research on the Relationship between Connected Transactions and Earnings Quality Based on Efficiency View and Excavation. Accounting Research, 10, 68-76.
- Yao, Y. and Liu, Z.Y. (2009) Are Institutional Investors Supervising? Financial Research, 6, 128-143.
- Wu, X.C., Zhang, J. and Hu, Z.Y. (2016) The Characteristics of Institutional Investors, the Ultimate Nature of the Controller and the Tunneling of Large Shareholders: Research on the Perspective of Connected Transactions. Foreign Economy and Management, 6, 3-20.
- Sun, L. and Lin, L. (2006) An Empirical Analysis of QFII Investment in Mainland China Stock Market. Financial Research, 7, 123-133.
- Hou, P.P. (2009) Comparison of Investment Behavior between QFII and China’s Securities Investment Funds. Shanghai Jiaotong University, Shanghai.
- Shen, W.T. and Zhu, G.D. (2011) Qualified Foreign Institutional Investors Excess Rate of Return and Small and Medium Investors “Protection—Based on the Perspective of Small and Medium Investors” Investment Strategy. Economic Management, 7, 160-166.
- Teng, L.L. and Huang, C.L. (2012) A Study on the Characteristics of QFII Shareholding in China—An Empirical Analysis Based on Stock Preference and Stock Period. Investment Research, 10, 84-97.