A Study On Firm Growth Based On Corporate Governance

Today global economic integration is more consolidated, enterprises are facing more complex and uncertain external environment, how to keep good momentum of growth of enterprises obviously is all stakeholders’ better vision, meanwhile how to achieve firm growth is one problem that scholars eagerly want to solve. After a great deal of research of technical and external environmental factors, the study on firm growth progresses slowly. In this dissertation, the technical and external environmental factors are rejected; corporate governmental factors on firm growth are explored deeply.In the first place, based on practical facts and phenomenon and a theoretical logic that firm growth is a result of human’s behavior which is affected by corporate government essentially, the research topic of firm growth based on corporate government is proposed. Then, the theoretical origin is identified by means of literature review, a concept frame of firm growth is proposed based on the existing concepts of firm growth to provide basis for the following research and to propose a thinking about how to make the whole firm growth research clear, and the corporate government structural frame is established to provide basis for the following research and to confirm the role of directors and top managers’ human capital and social capital in corporate government which is included in this research. Next, in order to carry out quantitative analysis, a large amount of data is collected manually, and firm growth is relatively comprehensively measured by calculating market expected growth capability, internal growth capability and scale growth rate using different method. After that, companies are divided into pyramid-shaped companies and non-pyramid-shaped conmpanies according to ownership structure, the firm growth measures previously computed are taken as analysis object, and the impacts of corporate government on firm growth about pyramid-shaped and non-pyramid-shaped companies are determined systematically from ownership structure, board of directors and top management’s incentive and supervision, and directors and top managers’ resources. Furthermore, pyramid-shaped companies are grouped according to the nature of the ultimate controllers to study corporate governmental factors’ features and laws on firm growth about the companies with different nature. At the end of the dissertation, corporate governmental factors on firm growth are comprehensively and systematically compared, analyzed and summarized based on firm growth measures, ownership structure and the nature of the ultimate controllers, so the overall law of firm growth based on corporate government is obtained with explanation.Generally speaking, the innovations and conclusions of this dissertation are mainly embodied in the following several aspects:(1) Firm growth research is expanded into the field of corporate government. Firm growth research remains stagnant after the resource based view and the capacity view, the study on impact factors is limited in technical and external environmental factors. It is obviously that corporate government has impact on firm growth, while maybe due to the complex of both of them, it is quite difficult to find out a clue to put them together to study on. A very few research is only restricted in an extremely limit field of corporate government or firm growth. The goal of expansion firm growth in the field of corporate government is to comprehensively identify the corporate governmental factors on firm growth relatively, thereby to confirm the stimuli to firm growth in the field of corporate government.(2) A concept frame of firm growth is proposed. This concept frame should at least include the change of quantity (scale), the change of quality (capacity) and dynamic process. Another view is also proposed that firm growth capacity should at least be measured by investors* expectation and internal efficiency. The results prove that firm growth is such a rich concept that using any single research conclusion to substitute firm growth’s overall conclusion will be biased. The proposal of the concept frame of firm growth provides a hint to avoid the conditions that research conclusions could not be compared to each other and to achieve consistence for future research.(3) Pyramid-shaped ownership structure is introduced into the firm growth research. La Porta et al discovered that the pyramid-shaped ownership structure exists generally, but the existing research focuses on the problem that under pyramid-shaped ownership structure how large stockholders expropriate small stockholders. By the aid of these research findings, the impact of pyramid-shaped ownership structure on firm growth is empirically explored, which expands and deepens the research of pyramid-shaped ownership structure. Furthermore, the ownership structure that there are no other layers of controllers between the ultimate controller and the controlled companies is defined as non-pyramid-shaped ownership structure which also exists generally in China and differs fundamentally from pyramid-shaped ownership structure. While the non-pyramid-shaped ownership structure is almost ignored up to now. Including the non-pyramid-shaped ownership structure in this study fills the gaps. The results show that the impacts of corporate government on firm growth about these two types of companies differ significantly.(4) The directors and top managers’human capital and social capital are introduced into firm growth research. In recent years, corporate government structures converge significantly, so the existing research that is limited in corporate government structure is restricted, meanwhile director and top managers’human attribute is brought into sharp focus. Corporate government not only provides a system arrangement for firm growth, but also provides resource such as human capital, social relations, etc. Therefore, with the help of up-to-date findings about Upper Echelons Theory, the impact of directors and top managers’knowledge, ability, experience, social relations, and so on on firm growth is deeply explored. The results reveal that the directors and top managers’resource has effects on firm growth that can’t be ignored.(5) The pyramid-shaped companies are analyzed according to groups which are determined by the nature of ultimate controller. The results indicate that private listed companies are extremely careful about firm scale expansion because of the limitation of business environment, while internal growth capacity is valued at the same time to resist external risk. Local state-owned listed companies are radical about firm scale expansion owing to local government’s protection, while under the stimuli of pursuing local benefit, such companies attach great importance to appeal to external investment to acquire growth funds, but internal growth capacity is ignored. As a result such companies’ growth appears lack of aftereffect. Any aspect of state-owned key listed companies’ growth does not receive sufficient consideration, because such companies not only lack owners, but also feel unnecessary to pursue local benefit.(6) Important empirical proof about firm growth under corporate government is acquired. Through a considerable number of data collection, quantitative analysis and comparative analysis, a large amount of empirical proof is obtained which can be summarized as follows:Firstly, only a few variables of corporate government including the number of the board of directors meeting, directors and top managers’average age and directors and top managers’educational heterogeneity has relatively consistent effects on firm growth under each measure and for each type of companies. Secondly, some variables of corporate government including the scale of the board of directors, directors and top managers’occupational heterogeneity, and the number of ultimate controller’s controlling layers and controlling chains hardly have any meaning to firm growth under each measure and for each type of companies. Thirdly, the remaining variables of corporate government have significantly different effects according to the measures of firm growth, ownership structures and the nature of ultimate controllers, indicating that ownership structures and the nature of ultimate controllers exert decisive effect on the impact of corporate government on firm growth.