As vital external-governance actors in capital markets

institutional investors have become a dominant force in China's A-share market. Most existing studies focus on the average effect of aggregate institutional ownership on stock price volatility

yet few explore differentiated influencing mechanisms for extreme stock price volatility from a heterogeneity perspective

which fails to deliver targeted theoretical support for preventing systemic market risks. This paper selects A-share listed firms on the Shanghai and Shenzhen stock exchanges from 2016 to 2025 as research samples. It adopts the annual total count of upward- and downward-limit hits of individual stocks as the proxy for extreme stock price volatility and applies a negative-binomial panel regression model to systematically examine the effects of aggregate institutional ownership and institutional investor heterogeneity on extreme stock price volatility. The empirical results are presented as follows. First

aggregate institutional investor ownership is significantly negatively associated with extreme stock price volatility. Institutional investors function as market stabilizers and effectively curb extreme price-limit events of individual stocks

which supports Hypothesis H1. Second

the stabilizing effects differ markedly across institutional types. Independent institutional investors

including securities investment funds and the National Social Security Fund

exhibit far stronger inhibitory effects than non-independent institutional investors such as broker proprietary trading desks and insurance asset management institutions. The regression coefficient magnitude of the former is more than three times that of the latter

and the coefficient difference passes the Chow test. Hypothesis H2 is therefore supported. The findings of this paper provide empirical evidence and decision-making references for regulatory authorities to implement categorized supervision over institutional investors

channel long-term capital into the market

and improve the risk prevention-and-control mechanism of the capital market.