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Corporate Governance Structure And Value Creation

Posted on:2005-02-13Degree:DoctorType:Dissertation
Country:ChinaCandidate:Y J LiFull Text:PDF
GTID:1116360155955116Subject:Management Science and Engineering
Abstract/Summary:PDF Full Text Request
With worldwide development of economy, the structure of corporate governance is undergoing deeply reconstructing. More and more financial economists and corporate governors realize that efficient corporate governance is the micro-fundament of modern market economy performing efficiently and healthily.While building modern corporate system was aimed as the main reform of Chinese state-owned enterprises, corporate company has been set up rapidly in the last ten years. Corporate governance not only has attracted more attentions from state and corporate governors, but also has been a hotly debated topic in academic research.The performance evaluation of a company is a key factor while understanding the structure of corporate governance. Economic-Value-Added, a value based index to evaluate the performance of a company, was first used in 1989 and from that auspicious beginning has captured the interest of many in the business community, such firms as Coca-Cola Co., Siemens Co., IBM Co., and Wal-Mart Co., etc., and has largely enhanced the capital efficiency of these companies.Based on the importance of performance evaluation of a company in corporate governance, this paper is constructed by two parts, the measurement performance of company and the structure of corporate governance, while combing EVA with the companies listed on Shanghai and Shenzhen stock exchanges. The main results are:1. This paper surveys the existed theoretical and empirical works on EVA. EVA is a new and improved measure of economic profits. The significant property of EVA is its incorporation of an opportunity cost of funds for the equity investors' capital. Comparing to the traditional accounting measures of earnings which are not relevant to explaining value creation, EVA can increase the rate of return earned on the existing base of capital, and invest additional capital in projects that return more than the cost of obtaining the new capital. EVA can also rebalance the rights and interests between shareholders and managers, and play an important role while bestirring and restricting the corporate managers.2. Based on the financial information of 456 firms listed at Shanghai Stock Exchange, this paper investigate the relationship between firm values and EVA, traditional accounting indexes and residual income from year 1999 to 2001. The evidences indicate that though EVA is positively related to firm values, the information content on firm values is very small. After controlling for traditional accounting indexes, EVA does not have any incremental information content on firm values. There are significantly positive correlations between firm values and traditional accounting indexes, and accounting indexes can explain firm values very well. Accounting indexes have strong incremental information content on firm values EVA. and can dominate EVA. EVA has incremental information content beyond residual income, and vice...
Keywords/Search Tags:Corporate Governance, Corporate Governance Structure, EVA, Value Creation, Shareholder Structure, compensation contract, Board Control
PDF Full Text Request
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