The Investment Behavior of Qualified Foreign Institutional Investors in China

39 Pages Posted: 18 Aug 2017 Last revised: 28 Jan 2018

See all articles by Ningyue Liu

Ningyue Liu

Beijing Institute of Technology

Don Bredin

University College Dublin (UCD) - Department of Banking & Finance

Huijuan Cao

Sun Yat-Sen University (SYSU)

Multiple version iconThere are 2 versions of this paper

Date Written: January 16, 2018

Abstract

Using data from Chinese listed firms, this paper examines the investment behavior of Qualified Foreign Institutional Investors (QFIIs). QFIIs have a preference for large well known firms with some element of state ownership, lower liability levels and greater turnover capacity. Furthermore, the presence of QFIIs in Chinese firms is associated with better levels of corporate operating performance. We show that this positive relationship is more pronounced, the deeper the international investors commitment, in terms of investment size and horizon. Our results highlight the heterogeneity of foreign institutional investors and provide evidence to support the view that foreign institutional investors in emerging markets provide an important source of managerial oversight. Our results are particularly noteworthy given all QFII’s in China represent small investors, with shareholdings below blockholder thresholds.

Keywords: Qualified Foreign Institutional Investors, Investor Heterogeneity, Investment Preference, Shareholder Activism

JEL Classification: G11, M41, G29

Suggested Citation

Liu, Ningyue and Bredin, Don and Cao, Huijuan, The Investment Behavior of Qualified Foreign Institutional Investors in China (January 16, 2018). Available at SSRN: https://ssrn.com/abstract=3020826 or http://dx.doi.org/10.2139/ssrn.3020826

Ningyue Liu (Contact Author)

Beijing Institute of Technology ( email )

5 South Zhongguancun street
Center for Energy and Environmental Policy Researc
Beijing, Haidian District 100081
China

Don Bredin

University College Dublin (UCD) - Department of Banking & Finance ( email )

School of Business
Blackrock, Co. Dublin, 4
Ireland

HOME PAGE: http://www.ucd.ie/bankingfinance/staff_bredin.html

Huijuan Cao

Sun Yat-Sen University (SYSU) ( email )

Guangzhou, Guangdong
China

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