Abstract
This article takes China’s A-share non-financial industry listed companies from 2007 to 2015 as a sample, starting from the social network algorithm, to study whether the grouping behavior of institutional investors in the network can affect the degree of executive reduction in the future. The study found that there is a significant positive correlation between the shareholding ratio of institutional investors in group holdings and the degree of future reduction of executives. This article explores the interactive behavior of Chinese institutional investors in the network, and expands the research of institutional investors on corporate governance and executives’ future reduction behaviors.
Highlights
Corporate governance, as an important mechanism for regulating various stakeholders within a company, plays a vital role in preventing management from using superior information to gain profits, thereby harming the interests of the company
Institutional investors, as one of the main bodies influencing the corporate governance mechanism, have become a force that cannot be ignored in China's capital market, especially after the China Securities Regulatory Commission put forward the strategy of "extraordinarily developing institutional investors" in 2001
Can institutional investors truly participate in corporate governance, and use their information and professional advantages to suppress management's opportunistic behavior? There are still fierce disputes in academia
Summary
As an important mechanism for regulating various stakeholders within a company, plays a vital role in preventing management from using superior information to gain profits, thereby harming the interests of the company. By virtue of the capital scale and information advantages, the effectiveness of institutional investors' participation in corporate governance is guaranteed [1] Another point of view emphasizes that in the context of China’s high equity concentration, the relatively low proportion of individual shareholding makes it difficult for institutional investors to form a synergy in corporate governance and play a role. Wu et al [6] used China's A-share listed companies as a sample and confirmed that the grouping of institutional investors in China will reduce the “exit threat” of individual investors He believes that as the proportion of institutional investors holding groups increases, listed companies will face a higher risk of stock price collapse. He believes that as the proportion of institutional investors holding groups increases, listed companies will face a higher risk of stock price collapse. will institutional investor groupings affect insider trading, especially the reduction of senior executives?
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