The Research On The Relationship Between Governance And Firm Performance Of Publicly Listed Family-controlled Firms In Zhejiang Province

After more than ten years development, publicly listed family-controlled firms have become an important power in China economy. However, there are also some disadvantages in their governance mechanism. Zhejiang Province has the largest quantity of publicly listed family-controlled company and has been paid more and more attentions. The research on the relationship between governance mechanism and performance is of great value to these companies, but research on family-controlled firms is just on the way. This paper, based on corporate governance theories, studied the relationship between the governance mechanism and firm performance of publicly listed family-controlled firms in Zhejiang Province empirically. And then, the author gives some advices to improve the governance.Firstly, the thesis analyses the corporate governance theory and the present situation of Zhejiang public listed family-controlled firms, and find their governance characteristics. Then, we choose 32 companies which are listed before then end of 2004 to do an empirical analysis. On the foundation of analyzing the relationship of governance mechanism and firm performance, we separate the firm performance into ROE and Tobin's Q. ROE means the firm value and Tobin's Q means the development ability of firm value. We build the linear model between ROE and governance mechanism and between Tobin's Q and governance mechanism separately. After doing so, we see the correlation and regression relationship between them, and find the relationship between firm performance and governance mechanism.The regression results show that SQ and YD affect the firm performance negatively; DSZE and ZJX affect the firm performance positively; and there is a complex relationship between T and firm performance. Based on these finding, this paper suggests that limiting the control power of the real controller, and the best controlling ratio is 50%; developing the manager market and realize the Board Recruitment Mechanism; strengthening the Board, add the directors to 10-13; actualize the incentive mechanism, using the economic interest incentive, power and status incentive, and firm culture incentive.