Research on the Role of Institutional Investors in Risk Management of Listed Chinese Companies

摘要

The expropriation of minority shareholders by controlling shareholders is the central agency problem in listed Chinese companies, which will harm performance and sustainable development of listed companies. There has been an explosive development of institutional investors recent years but the governance role of institutional shareholders is controversial. This study investigated the role of institutional shareholders in risk management of listed Chinese companies by studying the governance role of institutional shareholders. By constructing a model, this study researched on the risk of listed companies and find that controlling shareholders will expropriate minority shareholders. Then this paper studied on the role of institutional investors in mitigating agency problem and improving performance and find that institutional investors can mitigate agency problem and improve performance. Our finding suggests that institutional investors can play a beneficial role in risk management and eventually sustainable development of listed companies.