Game Analysis of Institutional Investors Participating in Corporate Governance

Abstract

By building a game model between the institutional investors and the management, an analysis has been conducted to uncover the influential factors that are crucial to the role switching of institutional investors when confronting tunneling behaviors of the management: supervision cost, shareholding ratio, invisible income, fines and patience. In cases of lower supervision cost, higher shareholding ratios, less invisible income, larger amount of fines, more patience and pursuing long-term gains, institutional investors will tend to play an active role in corporate governance. They will act as an active supervisor to restrain the tunneling behavior of the management.

Share and Cite:

Y. Li and Z. Li, "Game Analysis of Institutional Investors Participating in Corporate Governance," American Journal of Industrial and Business Management, Vol. 3 No. 1, 2013, pp. 64-68. doi: 10.4236/ajibm.2013.31008.

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1] Q. F. Cai and P. Li, “Collusion of Agents and Redistribution of Private Benefits of the Control Rights,” Journal of Zhongnan University of Economics and Law, No. 1, 2008, pp. 92-97.
[2] C. P. Wu, F. B. Zheng, Z. Y. Lin, W. Q. Li and S.-N. Wu, “A Theoretical and Empirical Study on What Affect Consideration Ratio for Split Share Structure Reform of Listed Companies in China,” Economic Research, No. 8, 2006, pp. 14-23.
[3] Q. L. Jin and Q. Y. Hong, “Corporate Governance and the Determinants of the Compensation Ratio in the SplittingShare Reform,” China Economic, No. 9, 2009, pp. 249-270.
[4] Z. G. Zheng, Y. M. Sun, S. T. Tan and D. Z. Jiang, “Consideration Determination in the Split-Share Structure Reform and the Examination of the Effectiveness of Corporate Governance Mechanisms in China’s Listed Companies,” Economic Research, No. 7, 2007, pp. 96-109.
[5] Y. Yao, Z. Y. Liu and J. Wang, “The Reform of NonTradable Shares, Institutional Investor and Investor’s Protection,” Journal of Financial Research, No. 11, 2007, pp. 45-56.
[6] Y. Pan, Y. Y. Dai and S. Q. Wei, “Do Institutional Investors Collude with Listed Companies: Analysis Based on Non-Voluntary Management Turnover and Selection of Succession,” Nankai Business Review, No. 2, 2011, pp. 69-81.
[7] Y. Fu and S. T. Tan, “On the Strategic Alignment and Insider Trading in Non-Tradable Share Market,” Journal of Financial Research, No. 3, 2008, pp. 88-102.
[8] J. Gaspar, M. Massa and P. Matos, “Shareholder Investment Horizons and the Market for Corporate Control,” Journal of Financial Economics, Vol. 76, No. 1, 2005, pp. 135-165.

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.