An Empirical Research On The Relationship Between Bank Performance And Characteristics Of Board Of Directors In China

Scientific governance of modern company's board of directors directly concerns the benefit of company and its shareholders. It has become one of the effective way to promote enterprise quality and to perfect the capital market. The condition of governance of the board characteristics, such as board size, independence, duality, board meeting frequency, and the incentive of the board staff affect on the right of board. A good board structure reflects its efficiency of management in modern corporate. To increase efficiency in the management and governance of a company, its structure is the main componentThis thesis analyzes the theories about the relationship between board characteristics and bank performance in detail first.Then we choose the listed commercial banks as our study object. The data come from their yearly financial report from 2005 to 2008.We analyze empirically the relationship between board characteristics(board size, the rate of independent directors, the condition of whether the chairman of board of directors acts as general manager, the frequency of the board meeting and the incentive of the board staff) and bank performance(measured by ROA).The results shows that the board size and bank performance present distinct U-shaped. The rate of independent directors is positively correlated with bank performance. The relationship between duality and bank performance is insignificantly negatively correlated. The frequency of the board meeting is negatively correlated with firm performance. Incentive of the board staff play a positive role in raising bank performance.These results demonstrate that these is a phenomenon of weak board in China' banks.According to the conclusions above, we further propose that the board system should be perfected and we give some suggestions to improve board efficiency.such as:standard the board size,improve and perfect the system of Independent Directors, improve the duality, enhance the efficiency of the board meeting and optimize the incentive of the board staff.