The Research On The Relationship Between Board Characteristics And Corporate Performance

Board of directors is the corporate decision-making organization. It has the decision-making right of the important events and it is an important part of the organization. China has take great stress on developing IT industry as a strategic industry. It has great theoretical and practical meaning to study the relation between board characteristics and corporate performance, which help to optimize the board governance structure and corporate performance.This paper is based on research ideas,such as theory research, empirical testing, and countermeasure suggestions. At first, it introduces the fundamental theory of board characteristics and corporate performance. Then we choose 72 IT companies in China as our study object. The data come from their yearly financial report of 2006. We analyze empirically the relationship between board characteristics and corporate performance of these IT companies. The results show that the board size and firm performance present distinct shape U. The rate of independent directors is negatively correlated with firm performance. The share proportions of the board members and firm performance do not present shape U. The frequency of the board meeting is negatively correlated with firm performance. Duality is positively correlated with ROE, and duality is negatively correlated with EPS.According to the conclusions above, we further propose that the board system should be perfected and we give some suggestions to improve board efficiency.