Empirical Analysis On The Relationshlip Between Characteristic Of Board And Corporate Performance Of Listed Companies In China

As an important institution which is in charge of employing, monitoring and assessing top management, the board of directors should make decisions on company's strategic development. Although the functions of the board of directors vary in different countries, monitoring and advising are two factors being emphasized. On the basis of agency theory, advising function can help each director to do his best and make better scientific decisions, monitoring role can help the board of directors reduce the agency cost and maintain the interests of shareholders. Consequently, the features of the board can influence the performance of the company. This paper aims to giving available advice for listed companies in China to establish a efficient and proper board by analyzing the relation between the features and performance of the board.Until now, a lot of foreign researchers have already done thorough researches on the relation between the features and performance of the board, but the results do not apply to listed companies in China. Compared to listed companies in Western countries, the legal system, economic environment and culture are really different in China. It can help to promote the reform of the board of directors of listed companies in China and make a better play to the functions of the Board to do a research of the relation between the features and performance of the board. Therefore, this paper developed some innovative ways by taking the actual conditions of listed companies in China into consideration.This paper is empirical research-based, 837 listed companies in China over the 2005-2009 period have been selected as the research subjects. The data of their research performance of the companies in these years and the feature of the board has been selected for further research. As the result shows that the relation between ROE and board size is hump-shaped. When the number of directors is 9 -10, it shows the best value of the listed companies; and there is no significant difference between the proportion of independent directors more than 1/3 and those lower or equal to 1/3; there is also no significant correlation between the Board Leadership Structure and performance of the company; it shows a negative correlation between the number of annual board meetings this year with the previous year and the corporate performance, and no significant relation with the corporate performance in next year; the relation between board ownership and ROE is also revealed by hump-shaped; with the optimal board ownership at 30%, the company has the best performance; At last, there also no significant relative relationship between the directors who don't salary from the listed companies and the corporate performance.