Researches On Corporate Governance And Growth Ability

Why some companies can survive for so long time while others declined and died out so quickly? Which factors have played the significant role and how do they influence the companies? This is an important and cosmopolitan question, but neither the firm theory nor the empirical research gives a satisfactory answer. This is the theoretical origin of my paper. In fact, since the Reform and Opening-up in China, it has been over 10 years for the development of the financial market, then till now there are over 1,400 listed companies. Although these companies have shown great development in both size and quality, they are still far behind those in developed countries. At the same time, some listed companies which used to play a leading role in their industry, have become ST, PT companies. But we still find some were even forced to quit the market. Up to July 21 2006, there have been 36 listed companies which quitted since Shuixian became the first one. Meanwhile, the number of the ST companies has increased by 59. Why are there so many shooting-star companies in our country? Why they could not keep stable, healthy and sustainable growth? Based on the analysis of Houwang Affair, the writer considers that the distempered corporate governance is the decisive reason for the existence of them. There is little existing literature which combines the growth ability with corporate governance. That is why this paper will introduce the corporate governance into the dynamic environment of firm growth.