Study On The Effect Of Corporate Governance To Enterprise Efficiency

Effiencicy is not only an important concern in macroeconomic field, but also an everlasting issue in microenterprises. Among most kinds of effiencicies, production efficiency (enterprise efficiency) is the key factor in this paper. Corporate governance will influence enterprise efficiency directly or indirectly through resources allocation and use. Therefore, the paper will try to research the effect of corporate governance to enterprise efficiency. Of the basic ideas and content that is: referring to the classic theory of corporate governance, the paper theoretical analysis the the relationship between corporate governance and enterprise efficiency. Using the data envelopment analysis (DEA), we measure the enterprise efficiency based the data of the Chinese listed firms from2006 to 2009; subsequently, investigate empirical the complicated factors, such as internal governance structure, control right of large shareholder and the type, external governance environment, impact enterprise efficiency. Finally, from the perspective of corporate governance, we propose the policy ways to improve enterprise efficiency.1. Basic conclusion in the thesis(1)The basic goal of corporate governance is that corporate governance through institutional arrangements and management behavior, make the enterprise resources reasonably allocating, so to realize enterprise efficiency optimal and sustainable. Concerning the shareholders and other stakeholders interests protection needs certain economic basis, this needs the enterprise, through the effective corporate governance, optimize the allocation of resources, promote enterprise efficiency optimization and sustain. In turn, only the interests of its stakeholders have been effectively protected, but also create a good environment and credit conditions to the decision-making of corporate governance, that is the optimal allocation of corporate resources, which helps achieve enterprise efficiency targets. Therefore, corporate governance and corporate efficiency theory is closely. Corporate governance affects the rational allocation of enterprise resources. The basic goal of corporate governance is the enterprise efficiency optimization. But only rely on between the coordination of internal mechanism and external mechanism the firms realize the optimization goal of enterprise efficiency.(2)The dissertation finds that efficiency of Chinese listed firms is very poor. From regional perspective, the more economically developed areas, are the production efficiency of listed firms higher, but the more backward areas, the production efficiency lower. The weak DEA efficient shows that the fims do not fully allocat resources, there is a serious waste of resources and plunder extensive, leading to the national economic growth in low quality. In addition, economic environment have a huge impact. For example, unbalanced regional economic development significantly impacts the production efficiency.(3)Concerning the internal management factors, such as ownership concentration, managerial ownership, the separate leadership have obvious positive effects on enterprise efficiency; board independence, board, supervisors diligent, board size and enterprise efficiency are weak negative relationship; ownership balance and the Audit Committee does not help to improve enterprise efficiency. The results show that, in the current practice of corporate governance, ownership concentration helps to improve company efficiency, but ownership balance does not effectivlly constraint the large shareholders' behavior. In order to achieve the goal, improving strategic decision-making of board, strengthening board independent are more important than size and diligence For the Supervisory and Audit Committee, given its independent oversight authority help to improve efficiency. Over the period of 2006-2009, managerial ownership was average 1.44%, not far from the optimal levels, so promoting the moderate managerial ownership will significantly improve the efficiency.(4) Control rights and and cash flow right positivly impact on enterprise efficiency, he divergence of two rights and owernship balances showed negative effects. Research proves, separated pyramid structure can offset the positive effect of owernship and control right of large shareholder, rather than unseparated pyramid structure can enhance the positive effect of large shareholder's. Under separated type, due to leverage equity incentives, as well as the principle of limited liability, large shareholder who can control seizes the private benefits of control. Therefore, large shareholder will rob the firms' interests, reduce efficiency. Under unseparated pyramid structure have improved enterprise efficiency.(5)The listed firms controlled by government, their efficiency are lower than non-government controlled firms; and the lower levels of government, the lower production efficiencthe. Research found that government-controlled firms, except county, city and province government-controlled ones, its efficiency is lower than the central government-controlled ones. Moreover, averagelly, efficiency of government-controlled firms are lower than the non-government ones, which is mainly caused by less efficient from the city and province government-controlled firms. Although county government-controlled firms positivlly affect on enterprise efficiency, but not dramatically. (6)The higher the marketization index, the smaller government intervention level, and the higher the law level, the listed firms' efficiency, belong to the district, are higher. Empirical test also found that reducing government intervention, compared with marketization and law, is more obvious influence to enterprise efficiency. Therefore, to reduce and avoid the bad government intervention is more positive. The external environment of corporation governance improvement, for the government control or non-governmental control firms, has a significant role in promoting efficiency. So, improve the external environment of corporation governance is vital to promote enterprise efficiency.2. Main innovation in the thesis(1)1 Preliminary constructed theoretical framework about the effect of corporate governance to enterprise efficiency. From the view of attributes and functions of modern joint-stock firm, based on the sustainable development of firms, I try to establishthe objectives of corporate governance, and "production efficiency" defined as corporate governance Short-term goal, is close to the production frontier, "maximize corporate value" is defined as a long-term objective of corporate governance. Then, using methods such as logical deduction, I research on the efect of corporate governance to enterprise efficiency from the related factors, such as ownership structure, internal governance, and external governance environmental.(2) Using data envelopment analysis (DEA), I exam the efficiency of listed firms, dataed from firm-lever of China's A-share stock over the period of 2006-2009; consequently, empirical test the effect of corporate governance on enterprise efficiency of listed firms. This research in this area provided additional evidence.3; Policy proposals in the thesis(1) Improving the internal management mechanism. Mainly includes:One is to strengthen the functions of the board. First, the responsibility of the board of directors was limited in strategic decision and supervision and control two aspects. Secondly, establish the board leadership team of democracy and science decision-making mechanism improve the board's strategic decision-making ability. Third, give full play to good board subordinate specialized committee includes strategy committee, risk management committee, the audit committee and the role of remuneration committee, etc. Fourth is clear limit to selection, compensation, and exit of the board members. Two is to reconstruct the burgeoning incentive-restricted mechanism. Mainly includes fostering fully competitive market, the implementation of the managers moderate salary incentive and equity incentives, reduce principal-agent problem; Develop capital market, make full use of "voting with their feet" losing the mechanism of constraint managers DE behavior. Three is fully exert the supervision function of supervisors board. To ensure that supervisors independence, perfect the selection mechanism of the member, strict qualifications, and further improve the supervision ways, implementation supervisors in the economic responsibility system supervisors.(2) Improving corporate governance external environment policies. Mainly includes:One is the deepening the reform of state-owned enterprise property rights. State-owned shares should further quit from the competitive field, clear ownership representative, reduce government bad intervention. Two is to cultivate and develop control market. Effective use of capital market platform, promote property transactions, improve the listed company overall structure, raise the quality of listed companies. Three is to improve the intermediary agencies, to strengthen professional quality supervision and of intermediary institutions of punishment, and clear intermediaries false behavior of the legal responsibility. Four is to perfect the related legal system. More could be operated on corporate governance laws, perfecting shareholder litigation system, implement the cumulative voting system related transaction of regulatory system, etc.