Research On The Relationship Between The Monitor Cost-Benefit Of "Moral Hazard" And Board Structure

Since corporate ownership and control had been separated, how to make managers serve for the benefit of shareholders well is a hot issue. In this process, corporate shareholders had designed a series of supervision and the incentive mechanism to realize the aim, and the board of directors is the core. Whether the boards can play their function of monitor managers? How make it better? These questions were paid attention widely. Especially in this financial crisis, people pay more attention to corporate boards. Today, researches on corporate boards almost around the board structure:the relationship between board structure and corporate performance, the relationship between board structure and managers'behavior, and influencing factors on board structure and so on. However most researches analysis board structures and managers'moral hazard from only one aspect, and do not analyse which foctors influence the board structure in the process of monitor. It can make researches appearance one-sidedness, even research bias. In my opinion, only analyse the influence of monitor cost-benefit in the process of monitor, can we real know the influence of board structure to managers'"moral hazard", and propose valuable suggestion to our country's listed companies. From this process of supervision, this research meticulous analysis the relationship between monitors cost-benefit and board structure. This paper not only enriches the relevant theories about internal management mechanism, but also improves the listed company's board construction.The paper use theoretical analysis and empirical analysis to analyse the relationship between cost-benefit of "moral hazard" and board structure. Specifically speaking, in the part of theoretical analysis, I point out the monitor intensity is a key variable to analyze the board monitor the manager, and it can be reflected by board structure. The board can be modified the monitor intensity by the board structure. And then, I point out in the process of monitor manager, it will occur monitor cost-benefit, and corporate can modify it intensity if monitor benefit more than the cost, and it can decrease the manager "moral hazard" effectively.Then I use a complete information dynamic game model to make solutions, and analysis the feature of the solutions, and propose three hypothesis: corporate choose stronger monitor board structure, when monitor benefit is more; corporate choose weeker monitor board structure, when monitor cost is more; managers' moral hazard will be decresed in stronger monitor board structre. In empirical analysis part, I use some kinds of statistical and econometrics technique, such as independent sample T test, multiple linear regression and Logistic regression and so on to analysis whether the monitor cost and benefit can influence the board structure,and whether board structure can influence the manager's "moral hazard" after the cost-benefit analysis.The paper is divided into eight chapters:The first chapter is introduction. This chapter's main content is introduce the whole paper briefly, including the research background, research value, research methods, research train of thought and the research innovations, as well as the structure and organization of the paper.The second chapter is the document review. Firstly, I commend the representative documents about managers' "moral hazard", especially about over-investment, office consume. Secondly, I commend the effect of board structure on corporate performance. Thirdly, I commend the influencing factors on board structure. At the last, I points out these documents'defects and my research direct.The third chapter is theoretical analysis about the relationship between the monitor cost-benefit of "moral hazard" and board structure. At first, I use principal-agent theory analysis the importance of board monitor function. Secondly, I make board structure and the managers'"moral hazard" into a unified analytical framework from the thought about cost-benefit analysis. Then based on these analyses, I establish a game model about the board of directors and managers, and expect to discuss the relationship between board structure and managers'moral hazard though construct and analysis the game model. And then, proposed the supposition that the article needs to confirm.The fourth chapter is empirical analysis design about the relationship between the monitor cost-benefit of "moral hazard" and board structure. In this chapter, I analyse the content in the whole empirical analysis part, and analyse their relationship. Then I choose the variable and the sample from our country's listed companies, and process descriptive statistics on main variable. It can make a foundation for empirical analysis.The fifth chapter is the influence of monitor benefit on board structure. Firstly, analysis related factor on board's monitor benefit from document and theory, and proposed the suppositions that the chapter needs to confirm. Secondly, test the influence of monitor benefit on board structure, which I use the method of independent sample T test and multiple linear regression. At the last, because State-owned companies different from non-State-owned companies in the property rights nature, this possibly make some deference from these two kinds of companies'shareholders behavior on choose corporate board, and then make deference in board structure choice. So, I prepare divide the whole sample into two groups, then empirical analysis separately and process the comparative analysis. Research find during monitor benefit increase, the company tends to expanding board size. However, monitor benefit can't significantly influence the proportion of independent directors and dual role of the board chairman.The sixth chapter is the influence of monitor cost on board structure. Firstly, analysis related factor on board's monitor cost from document and theory, and proposed the suppositions that the chapter needs to confirm. Secondly, test the influence of monitor cost on board structure, which I use the method of independent sample T test and multiple linear regression. At the last, because State-owned companies different from non-State-owned companies in board structure choice, I divide the whole sample to two groups, then empirical analysis separately and process the compare their defference in board structre choice.Research finds that the board structure was not affected by the monitor cost in Chinese listed companies.The seventh chapter is the influence of board structure on managers'moral hazard. In the analysis process, I use over-investment and office consume as the substitution variable to managers' moral hazard, and test the influence of board structure on managers'moral hazard empirically. At the mean time, because board structure is an endogenous variable, it is affected by monitor cost-benefit. It will be a research bias if use OLS estimation. So I use OLS and 2SLS to estimate regression model, and compare their diffenerce. As the research before, I divide the whole sample to two groups (State-owned and non-State-owned), then empirical analysis separately and process the comparative analysis.Research finds that when considering the monitor cost-benefit, the increase of monitor intensity will help restrain company manager's "moral hazard"The eighth chapter is conclusions and suggestions. In this part, I summarize and elaborate the main conclusions, and then gives some suggestions to our country's listed companies, supervise authorities and some other parties. At the last, I point the direct of future researches.The innovations are mainly embodied in the following aspects:(1) Documents only analysed the influence of board on manager behavior before, and do not analyse the influence of monitor process to board structure. The paper make monitor cost-benefit, board structure and the managers'"moral hazard" into a unified analytical framework, so that analysis their relationship more scientific and complete. (2) From the monitor function of the board, systematic analysis the influence of monitor cost-benefit to the board structure, and avoid the previous defects that neglected to the monitor functions of the board in the document before. (3) Analysis the effect of board structure to managers "moral hazard" from the perspective of the endogenous, and use monitor cost-benefit as instructment variable. So it makes the conclusion more convincing.