Keywords institutional investors; Corporate governance; capital market
On February 28th, 2008, Yao Gang, Vice Chairman of China Securities Regulatory Commission, pointed out at the "International Symposium on Pensions in 2008" sponsored by the National Social Security Fund Council that at present, the shareholding ratio of institutional investors has accounted for nearly 50% of the circulating market value of A shares. By the end of 2007, there were 59 fund companies in China, with 346 funds under management, and the asset management scale was.
2,233.9 billion copies, the net value of the fund is 3,276.2 billion yuan, and the market value held by the fund accounts for 28% of the circulating market value. The stock market value of insurance funds, social security funds and enterprise annuities accounts for about 3.34% of the circulating market value. By the end of June 5438+ 10, 2008, 52 overseas financial institutions in China had obtained QFII qualification, with a foreign exchange quota of 9.995 billion US dollars, and the market value of QFII shares accounted for about 1.7% of the market value of stock circulation. Institutional investors have become an important force in China's capital market. As an important participant in the capital market, institutional investors play an important role in improving the structure of investment subjects, stabilizing the market, actively trading, promoting corporate governance and even promoting the competition and efficiency of the financial system.
First, the development of institutional investors in China's capital market
The development of institutional investors in China capital market has gone through three stages. In the first stage (1992- 1997), the fund developed in a state of lack of rules and regulations, weak supervision, fragmented local governments and rampant speculation, and finally ended up with China Securities Regulatory Commission "standardizing the old fund"; In the second stage (1997-2000), the China Securities Regulatory Commission promulgated the Interim Measures for the Management of Securities Investment Funds, and introduced institutional frameworks such as custody with reference to the experience and lessons of fund development in major developed countries, so that China's fund industry gradually entered the track of standardized development. However, due to the overall standardization of the market and other reasons, although the development of the fund industry has made some progress, the speed and standardization of development are still not satisfactory. After a period of rectification, the first domestic open-end fund was successfully issued in 200 1 year. In the third stage (2002-present), under the background of the market-oriented reform vigorously promoted by the regulatory authorities, the fund industry in China has started a course of extraordinary development. The scale of institutional investors has increased rapidly and has become a mainstream force that cannot be ignored in the market. When ZTE Corporation (SZ) issued H shares in 2002, institutional investors showed the enthusiasm of Chinese institutional investors to participate in corporate governance.
On August 20, 2002, despite the strong opposition of many funds and minority shareholders, ZTE's extraordinary shareholders' meeting passed the H-share issuance plan with more than 90% in favor. Although the overall situation has been decided, dozens of institutional investors such as Hantang Securities, Shen Yin Wanguo and Changsheng Fund still jointly wrote to the CSRC, demanding that ZTE's H-share issuance be treated cautiously to protect the interests of small and medium-sized investors. The reason why many fund companies oppose ZTE's plan to issue H shares is that the company's issuance of H shares leads to the dilution of existing shareholders' rights and interests as a whole, which infringes on existing shareholders' rights and interests. The "Zhongxing Incident" is a game between major shareholders and tradable shareholders, which sends a positive signal: institutional investors begin to play a role in corporate governance.
Second, the reasons for institutional investors to participate in corporate governance
Institutional investors' participation in corporate governance is more due to the trust responsibility and the improvement of shareholding ratio. Compared with minority shareholders, they are more motivated to participate in corporate governance and supervise management. At this time, the benefits they get from the supervision activities far exceed the costs they bear.
(1) The total capital held by institutional investors in the capital market is gradually increasing.
As a result of this increase, the scale of institutional investors is growing, and it is obviously inconvenient for them to use the traditional way of "walking on Wall Street". "They hold a large number of shares. Once locked up, you must speak, otherwise the cost of cutting meat is too high. Moreover, institutional investors selling stocks in large quantities will inevitably impact the market, causing stock prices to plummet and damage themselves. " On the contrary, it is precisely because they have a large amount of total capital in the capital market that they are able to participate in corporate governance, and the interests of participation are often higher than those of non-participation.
(B) The empirical analysis of management also provides favorable evidence for institutional investors to participate in corporate governance.
Frequently buying and selling stocks can't get higher than the market average, but holding growth stocks for a long time can get higher returns.
(c) The participation of institutions in corporate governance is conducive to solving problems related to the long-term interests of the company, such as corporate control rights and corporate equity institutions.
The realization of the company's long-term interests will inevitably bring tangible benefits to institutional investors, thus forming an organic combination of institutional investors as shareholders and the company's long-term interests.
Thirdly, the feasible ways for institutional investors in China capital market to participate in corporate governance.
The United States is one of the countries with the most mature capital market in the world, and the degree of institutional investors' participation in corporate governance in the United States is also in the forefront of the world, which has reference significance for institutional investors' participation in corporate governance in China. Combined with the characteristics of China's capital market, institutional investors can mainly enter China's capital market in the following ways:
(1) Exercise the voting rights of shareholders.
Institutional investors participate in shareholders' meetings by virtue of their share of shares and exercise their voting rights.
(2) Convene an extraordinary general meeting of shareholders and an extraordinary board of directors, and put forward shareholders' proposals.
Institutional investors hold an extraordinary shareholders' meeting and an extraordinary board of directors to discuss major issues of the company and submit some shareholders' proposals to the board of directors or management to help solve their problems.
(3) exercising proxy voting rights
Institutional investors exercise proxy voting rights on behalf of other shareholders at the shareholders' meeting, gain more voting shares and improve their right to speak, which also requires institutional investors to be active and cautious in exercising proxy voting rights.
(4) Monitoring the invested company.
American institutional investors usually employ experts in accounting, auditing and law as independent directors of the invested company to strengthen the management and control of the company.
(5) Talking in private
Institutional investors in the United States often use informal dialogue to question and discuss the company's performance with the management of the company's board of directors.
Fourthly, the positive role of institutional investors in corporate governance of China capital market.
(A) improve the functions of the shareholders' meeting
The unreasonable ownership structure of listed companies in China is manifested in three aspects. 1. The shareholding ratio of the controlling shareholder is too high; 2. The proportion of shareholders' equity in tradable shares is low and too scattered; 3. The high proportion of state-owned shares leads to the absence of state-owned shareholders and serious "insider control" problem.
At present, China's listed companies are carrying out the share-trading reform, and after the reform is completed, the full circulation of shares will be realized, and the phenomenon of shares with the same rights will no longer exist. As investors, institutional investors, by virtue of their share share, become a force to restrict major shareholders and supervise related transactions that harm minor shareholders. In addition, it can make up for the vacancy of state-owned shareholders, give full play to the power of shareholders' meeting, supervise managers' business decisions and reduce the problem of "insider control".
(B) improve the independence of the company's board of directors
Institutional investors' attention to the governance of listed companies is helpful to improve the independence of the company's board of directors. The board of directors is the core of the company's internal control system, and the existence of independent directors is conducive to improving the governance of listed companies and enhancing the value of enterprises. On the contrary, the board of directors controlled by insiders is prone to make improper decisions and harm the interests of shareholders. With the strong promotion of institutional investors, the independence of the board of directors will continue to improve.
(C) reduce the short-term behavior of operators
Large-holding and mature institutional investors will supervise and restrain the management to ensure that the investment level they choose can maximize the long-term value of the enterprise rather than just meet the short-term income target. Bushee's empirical study found that when institutional investors hold a high proportion of shares, managers are less likely to reverse the decline in earnings by reducing R&D expenditure, which means that institutional investors are mature investors and assume the supervisory role of reducing managers' short-sighted behavior.
(4) Providing suggestions for the company's decision-making.
Institutional investors focus on professionals in governance, which can better perform governance functions and increase the professionalism and scientificity of corporate decision-making. Pound (1995) pointed out: "In many companies, managers do not lack incentives, but lack the ability to choose better strategies." Pound believes that because managers lack the ability to choose better strategies, they often make wrong decisions, and the company is in crisis as a result. In his view, to prevent this kind of wrong decision-making, we need a system in which top managers and the board of directors can really make cooperative decisions. In addition, he believes that directors and managers should actively seek the participation of institutional shareholders. It can be seen that institutional investors are no longer the negative part of the management company model, but have become active participants in corporate governance. Because their participation can affect the formulation of managers' strategies and improve corporate governance.
Verb (abbreviation of verb) Suggestions on giving full play to the positive role of institutional investors in corporate governance of China capital market.
(A) institutional investors to improve their professional quality, improve the internal legal system of institutional investors.
Institutional investors in China should vigorously introduce industrial management talents. After investing in listed companies, the long-term planning for the future development of listed companies should not always focus on capital reorganization and financial investment, but should guide the long-term business direction of enterprises. We should actively improve the internal legal system of institutional investors, make the internal organizational structure of institutional investors reasonable, and solve the problem of institutional investors participating in the supervision of supervisors in corporate governance.
Relax the restrictions on institutional investors' participation in corporate governance.
The research report group of the World Bank (200 1) shows that when the stocks held by institutional investors reach a certain critical value (accounting for 20% of the total stock market), they may actively participate in corporate governance. At present, China's capital market has certain restrictions on the shareholding ratio of institutional investors. For example, it is stipulated that the shares of listed companies held by the fund shall not exceed10% of the fund's net value; The proportion of a securities held by the same fund manager shall not exceed 10% of the securities. The purpose of these restrictions is to disperse the risks of institutional investors, but it also leads to the excessive dispersion of institutional investors' investment and their low enthusiasm for participating in corporate governance. Therefore, these restrictions should be appropriately relaxed, so that institutional investors can become active investors and major shareholders of the company, really pay attention to the long-term development of the company, and deeply and actively participate in corporate governance.
(3) Vigorously support and cultivate diversified and large-scale institutional investors.
The types of institutional investors should be diversified to encourage different types of institutional investors to actively participate in corporate governance to obtain profits. With the development of China's economy and the continuous improvement of social insurance system, the scale of social insurance funds, pension funds and financial investment companies in China will become larger and larger. The development of these institutions has made it possible to expand the ranks of institutional investors. After China's entry into WTO, China gradually opened its domestic securities market and introduced qualified foreign institutional investors (QFII). Qualified foreign institutional investors (QFII) with abundant capital and rich corporate governance experience are active in the China stock market, which will have a positive impact and exemplary role for institutional investors to participate in the corporate governance of listed companies in China. The law must gradually relax the restrictions on its participation in investment activities, so that it can participate in corporate governance according to the law.
(4) Improve the proxy solicitation system for voting rights.
The proxy solicitation system of voting rights is an effective means for minority shareholders to confront the company operators and major shareholders at the shareholders' meeting, which plays an important role in highlighting the status of minority shareholders, realizing share democracy and protecting the interests of investors. The improvement of the voting right collection system can reduce the cost of institutions participating in corporate governance. The cost of institutional participation in corporate governance can determine whether a company is an active investor. When the cost is too high, institutional investors often adopt the method of "voting with their feet". However, China has not yet established a perfect proxy solicitation system for voting rights. In order to encourage institutional investors to vote by hand, China's laws should improve the proxy solicitation system for voting rights.
(five) the establishment of institutional investor organizations
The establishment of institutional investors' self-regulatory organizations is conducive to solving the problems of institutional investors' collective bargaining costs and hitchhiking. The organization of institutional investors provides a platform for information communication and collective action among various institutional investors, and its investigation on institutional investors' participation in corporate governance provides convenience for institutional investors to understand corporate information. Through the analysis and publication of the survey results, institutional investors are encouraged to participate in corporate governance. China still lacks such a self-regulatory organization. In order to promote institutional investors to actively participate in corporate governance, China's management departments can try to guide the establishment of institutional investors' self-regulatory organizations. At the same time, it can guide stock exchanges or private research institutions to establish some investigation centers, and organize and coordinate institutional investors to participate in corporate governance.
Main references
[1] Zhang Fang. Theory and practice of corporate control. Southwest Normal University Press, 2006.
[2] pounds. Translated by Sun Jingwei. Corporate governance [M]. Beijing: Renmin University of China Press, 2002.
[3] W.T. Carleton, J.A.Nelson, M.S.Weisbach. The Impact of Private Negotiation on Corporate Governance: Evidence from Tiaa2cref [J]. Journal of Finance, 1998, (53):1335-13621.
[4] S.G. Monk, N.Minow Corporate Governance [M] muldoon, Massachusetts: Blackwell Press, 1995.
[5] B.J. Bushee. The influence of institutional investors on short-sighted behavior; D investment behavior [j]. Accounting review, 1998, Vol 173, (3):305-33 1