The Relationship Between Internal Governance And Competitiveness Of Listed Companies: Positive Evidence From China

All the companies in the world today can not avoid facing the white hot market competition, with the procedure of economic globalization. Meanwhile, as the number of joint stock company (JSC) increased, which makes the principle-agent problem is getting more and more common and becomes an obstacle of the firms'competitiveness improvement and further development. Therefore, the discussion of corporate govemance and company competitiveness become the hot topics in the academic circles. But according to the reference documents that we collected, these two topics are studied separately. The research about the corporate govemance and firm competitiveness, either normative or empirical, is rare. To study arranging the corporate govemance mechanisms reasonably, solving the principle-agent problem,and improving the competitiveness of listed firms is our original purpose. As a result,we put the intemal governance and competitiveness into the same study frame and try to find out the link between them.Having taken the companies which listed on the Shanghai and Shenzhen Stock Exchange as the sample, used the cross-section data of years 2004, this dissertation constructs multivariate regression equations of internal governance and competitiveness, applying the WLS to estimate the equations. The empirical results show that :(1)there is a U-shaped relation between corporate competitiveness and the share ratio that the first largest shareholder holds, existent of other large shareholders can reduce the tunneling activities of the largest shareholders; (2)the firms which have the state as the largest shareholder have lower corporate competitiveness; (3)the insiders ownership has a negative effect on the corporate competitiveness; (4)firms have foreign shares have stronger competitiveness; (5)pluralism of board chairman and CEO and the corporate competitiveness have positive relation but without economic significance;(6)independent directors can improve the corporate competitiveness; (7)there is significant negative relation between the board size and corporate competitiveness; (8)corporate competitiveness and CEO age have an inverted U-shaped relationship; (9)a competitive compensation mechanism of top executives is very important to the improvement of the firm competitiveness.