Empirical Research On The Relationship Between General Manager Tenure And Firm Performance

Under the modern enterprise system whose main characteristics is the separation of ownership and management, the general manager becomes the agent of the board, and it is in core position of the enterprise high-level power system. In order to let the manager work hard for the enterprise and shareholders, how to determine the length of the manager's position tenure becomes an important question except setting the system of the general manager's salary reasonably according to the principal-agent theory. Since 1995, the replacement rate of CEO has increased significantly globally. The tenure of general manager is shortened, which semms to be a new trend. In the recent ten years, large number of cases of the frequent change of executives have been found in our country, the rate of manager's replacement is increasing,and the term is shortening.At the same time, the length of the general manager and other senior manager's tenure become the new focus both in the top management and corporate strategic management area in recent years. Although the relationship between the general manager's tenure and corporate performance is drawing more and more attention from both the domestic and foreign scholars, but standardized empirical studies on it are still relatively few. In particular, such research started late in our country and the corresponding research results are few, more authoritative and pioneering literature is also lacking.In order to study the relationship between the general manager's tenure and corporate performance, in this paper, I select 313 A shares manufacturing sector listed companies which fist listed in Shanghai and Shenzhen by the year of 2000 as a sample. And I combined theoretical analysis with empirical research methods, selecting the year of 2007 as data window.During the theoretical researching, first of all, on the basis of reviewing and commenting the relevant literature, I construct the theoretical model, combing with our market progress and the actual market environment's characteristics. In the theoretical model, the independent variable and dependent variables is respectively general manager tenure and corporate performance. Other factors which may affect the relationship between company performance are designed for the control variable. In this paper, I select the age of general manager, whether the general manager holding shares of company or not, and whether the company is State-controlled enterprise or not as three control variable. Second, according to relevant theory and the theoretical model, I propose the the empirical part's research hypotheses.In the part of Empirical studying, the first step is to evaluate the performance of the sample listed companies in 2007. Using the principal component analysis method, I analyze financial indicators of the samples in profitability, solvency, capital management capabilities and capacity development four areas. And structurt the integrated performance index showing the true level of the company's performance. Secondly, I did the descriptive statistical analysis on the variables of theoretical model; Finally, I used the correlation analysis and regression analysis to test the research hypothesis. Specifically, the correlation analysis is used in testing the relationship between general manager's tenure and company performance, and testing three control variables's impact on that relationship. Then the Curvilinear regression analysis is used in testing the U-shaped relationship between general manager's tenure and company performance. The concrete relational model will be established through comparing the three assumed models.This research results show that the relationship between general manager tenure and corporate performance reflecting as positive U-shaped curve; The average performance of those companys with young general manager, holding shares's general manager and state-controlled listed company was better than that with older general manager, not holding shares's general manager and private-controlled listed compamy. The age of general manager, whether the general manager holding shares of company or not, and whether the company is State-controlled enterprise or not plays a significant effect on the relationship between general manager tenure and corporate performance obviously. It's mean that with the tenure increase,the relationship form between general manager tenure and corporate performancebecome more pronounced in the companys which with young general manager, shareholding general manager and which are private-controlled listed companys.