Corporate Governance's Dynamic Adjustment Of Listed Companies In China

In this paper we mainly concern whether corporate governance of listed companies in China is adjusting progressively and the relationship between performance and governance structure is changing. In order to describe the dynamic adjustment, we build G index as the reflection of the governance level, and study the path of the adjustment with G indexWith the panel data of 1186 companies from 1998 to 2009, we describe the high concentration of equity structure and explore the relationship between governance structure and performance. Compared to the profitability, corporate governance structure variables are in effect with corporate marketing value more obviously; Internal governance is more efficient; there is inverted U-shaped relationship between holding rate of the company's largest shareholder and the enterprise value; lower state-owned rate and more outstanding shares lead to higher marketing value; board size has negative relationship with corporate value; change of chairman has a positive effect; Salary system is far away from perfect; managers has few shares; external governance is weak in China.According to the regression above, we extract the key factors to build G index which is an objective description of governance situation. We find two aspects of the dynamic evolution with G index:the marketing performance adjustment and governance structure adjustment.We firstly receive that G index is adjusting progressively accompanied by the gradual process of enterprise reform in China. Before 2005, G index was increasing slowly; shareholding reform accelerated the improvement of corporate governance in 2005 which caused a substantial increase of G index.Further, we use two methods to research the "marketing performance adjustment". One-stage we get that different capital market environment vary degree of effect from corporate governance derived from the time-adjustment model. Corporate governance accelerates improving the value for the enterprise after 2005. The other hand, we build a dynamic model using GMM under classical economics paradigm and find that the marketing performance has not reached the optimal level with established governance and production factor. But it is convergent by the rate of 54%. We call it "viscosity of adjustment" which defines the realistic, positive and gradual reform.