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Discrete Dynamics in Nature and Society
Volume 2014 (2014), Article ID 821463, 9 pages
http://dx.doi.org/10.1155/2014/821463
Research Article

The Relations between QFII Holdings and Company Performance: Evidence from China’s A-Share Listed Companies

1School of Business, Central South University, Changsha, Hunan 410083, China
2School of Economics, Fudan University, Shanghai 200433, China

Received 13 March 2014; Revised 4 June 2014; Accepted 6 June 2014; Published 23 June 2014

Academic Editor: Fenghua Wen

Copyright © 2014 Xiong Wang et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

In order to investigate the relations between qualified foreign institutional investors (QFII) holdings and the performance of the A-share listed companies and effectively distinguish between QFIIs’ ability to identify value companies and their ability to enhance company value, this paper empirically examines the relations between QFII holdings and company performance using Chinese annual report data from 2010 to 2012. The results show that QFIIs have strong ability in identifying value companies. However, the effect of QFII holdings on company performance improvement is mainly manifested in the short term, and the long-term effect is insignificant. In the long run, QFIIs may not be considered as “value boosters,” implying that it is unlikely for QFIIs to greatly enhance company value and help the invested companies to improve the level of governance and their long-term performance.