QFII’s Capacity for Institutional Activism

  • Wenge Wang


The level of institutional ownership plays an important role in the effectiveness of monitoring. Kahn and Winton claim that “if we are to predict which firms an institution is most likely to intervene in, we must look at … the size of the institution’s stake” (1998, 101), as this may “influence the magnitude and sign of intervention’s impact on the institution’s trading profits” (1998, 101). The implication underlying this claim is that the size of its stake is the basis on which an institution decides whether to intervene. It also suggests that the lower the threshold of the size of the stake needed for intervention, the greater the gains from a large size stake and the easier is the decision made by the institution on whether to intervene. The model of ownership structure will have a direct influence on this threshold and is normally much lower in a dispersed ownership structure than in a concentrated ownership structure. This threshold should be the level of ownership of voting shares needed for an institution to influence or put pressure on the decisions made by management at the annual meeting.


  1. Bennedsen, Morten, and Daniel Wolfenzon. 2000. The Balance of Power in Closely Held Corporations. Journal of Financial Economics 58: 113–139.CrossRefGoogle Scholar
  2. Brev, Alon, Wei Jiang, Frank Partnoy, and Randall Thomas. 2008. Hedge Fund Activism, Corporate Governance, and Firm Performance. The Journal of Finance 58 (4): 1729–1775.CrossRefGoogle Scholar
  3. Franks, Julian, and Colin Mayer. 1997. Corporate Ownership and Control in the UK, Germany, and France. Journal of Applied Corporate Finance 9 (4): 30–45.CrossRefGoogle Scholar
  4. Kahn, Charles, and Andrew Winton. 1998. Ownership Structure, Speculation, and Shareholder Intervention. The Journal of Finance 53 (1): 99–129.CrossRefGoogle Scholar
  5. Kirchmaier, Thomas, and Jeremy Grant. 2005. Corporate Ownership Structure and Performance in Europe. European Management Review 2: 231–245.CrossRefGoogle Scholar
  6. Maug, Ernst. 1998. Large Shareholders as Monitors: Is there a Trade-Off Between Liquidity and Control? The Journal of Finance 53 (1): 65–98.CrossRefGoogle Scholar
  7. Morck, Randall, Andrei Shleifer, and Robert W. Vishny. 1988. Management Ownership and Market Valuation: An Empirical Analysis. Journal of Financial Economics 20: 293–315.CrossRefGoogle Scholar
  8. Pagano, Marco, and Ailsa Röell. 1998. The Choice of Stock Ownership Structure: Agency Costs, Monitoring, and the Decision to Go Public. The Quarterly Journal of Economics 113: 187–225.CrossRefGoogle Scholar
  9. Shleifer, Andrei, and Robert W. Vishny. 1986. Large Shareholders and Corporate Control. Journal of Political Economy 94 (3): 461–488.CrossRefGoogle Scholar
  10. Short, Helen, and Kevin Keasey. 1999. Managerial Ownership and the Performance of Firms: Evidence from the UK. Journal of Corporate Finance 5: 79–101.CrossRefGoogle Scholar
  11. Sun, Ji, Li Ding, Jie Michael Guo, and Yichen Li. 2016. Ownership, Capital Structure and Financing Decision: Evidence from the UK. The British Accounting Review 48: 448–463.CrossRefGoogle Scholar
  12. Wildau, Gabriel, and Hudson Lockett. 2017. China Pledges to Open Finance Sector to More Foreign Ownership.

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Wenge Wang
    • 1
  1. 1.AnshanChina

Personalised recommendations