Board Governance And Corporate Operation Results

In recent years, worldwide security markets have experienced a log of accounting scandals that involved many great name including: Enron, Xerox, Worldcom, Ahold, Lantian and Yinguangsha. As a result of these scandals, the public became doubtful toward corporate governance system, board governance in particular.When studying the relationship between board governance and corporate operation results, the past domestic study of board governance focused more on profit and corporate value measures. But accounting profit measures are very likely subject to management's manipulation, which will distort the real situation in the company. This paper, however, used Cash Flow per Share to replace accounting profit measure and modified Market Book ratio to replace Tobin Q. The studies sample is the effective 118 companies out of the total 136 companies went public in 2000. The study period is 2001 and 2002. Thus, we have 236 observations to study the relationship.First, the paper introduces the basic concepts, importance and theories of corporate governance as well as the major governance patterns. Second, it discusses the development of the board in modern companies and the function of the board. Third, the paper explains the regression model, data source and basic hypothesizes, and summarizes the past study on corporate governance. Fourth, it displays the process and results of the regression and statistical description. At last, the paper gives some suggestions to China companies regarding corporate governance practice based on the research results and discusses further study in the future.The empirical results are as follows: board size has a significant negative correlation with corporate results; percentage of independent directors is not positively correlated with corporate results; whether CEO takes general manager's role or not is not negatively correlated with corporate results; the percentage of directors' stock has a significant positive correlation with corporate results; the set up of audit committee has positive correlation with corporate results but not significant.