An Empirical Study Of The Impact Of Listed Companies Corporate Governance On Corporate Competitiveness

With the integration of global economy, companies need to consider not only how to survive in one's home country, but also to ponder how to stand on their own feet within even larger economies. Therefore, the issue of corporate competitiveness has become present focus of research, on which many scholars and institutions have put forward highly innovative opinions. There are various factors capable of influencing corporate competitiveness and corporate governance is regarded as the endogenous variable of corporate competitiveness. As an institutional arrangement, corporate governance is aimed at handling the relationships between each interest group. Both corporate competitiveness and corporate governance have been the focus of attention in the academia in recent y ears, however, much previous research separates the corporate competitiveness from corporate governance. The purpose of the paper is to study the impact of corporate management system on corporate competitiveness and namely to test the fact that corporate governance system significantly influences corporate competitiveness through the example of a highly competitive industry—electronics and information industry by applying the method of combining theory and practice. Thus we can enhance corporate competitiveness by means of improving corporate management system so as to ensure the company's survival and development in a hyper-competitive market.To lay a solid writing foundation for the thesis, the article first reviews relevant theories to corporate governance and corporate competitiveness, through which we can realize the extent of the foreign studies concerning corporate governance and corporate competitiveness, its present new trends and the problems embedded in the previous research. This section offers a theoretical definition of corporate governance and then summarizes the studies concerned with the evaluation system for corporate management system by scholars both at home and abroad. The second part deals with corporate competitiveness. First it identifies the definition of corporate competitiveness. Then the impact of corporate competitiveness as well as its determinant factors is presented followed by the summary of the evaluation system for corporate competitiveness. The third section reviews the relationship between corporate governance and corporate competitiveness, from which we can see that the index system for evaluating competitiveness centers on the standard of profitability. However, enterprise performance often replaces corporate competitiveness while studying the relationship between corporate governance and corporate competitiveness. Besides, no highly competitive industry has ever been selected for separate study, which simply offers an opportunity for the research.The paper clarifies the research direction after comprehensive literature review. It states first the mechanism graph for the influence of corporate governance on corporate competitiveness. The environment in which the enterprise is situated can affect the exertion of corporate competitiveness. The resources and capability owned by the enterprise determine the strength of corporate competitiveness. The corporate management system can influence the environment, resources and capability, thus corporate governance surely has certain influence on corporate competitiveness. Subsequently, the paper selects three main dimensions in corporate governance: ownership structure, board and management incentive, the influence of which on corporate competitiveness is respectively analyzed.When corporate shares are highly concentrated, the company is controlled by certain major shareholder, who may jeopardize the interests of small and medium-sized shareholders or even those of the entire company simply to seek its own benefits. What is more, the resources brought about by other shareholders face no entry in to the company. State-owned shares are not motivated enough to consider corporate operation, and thus corporate competitiveness can not be improved. On the contrary, legal-person shares have definite investment body. It has the motivation to supervise the management and consequently can help enhance corporate competitiveness. However, liquid shares characterized with small proportion and obvious speculative behaviors neither have the ability nor opportunity to participate in the actual management of corporation. Also the mechanism of"vote with the feet"has not yet formed, as a result of which liquid shares can not affect corporate competitiveness.On one hand, independent director's system can form a restriction mechanism with agents of state-owned property rights, which prevents the occurrence of"insider control". On the other hand, it is capable of strengthening the independence of the board and intensifying the control over enterprise property, which actually creates a layer of insulation from the administrative departmental of the state-owned assets. This weakens the administrative control over state-owned assets, which is beneficial for the separation of government function from enterprises in a real sense and improving corporate strength accordingly.To reduce the agent problems that could cause corporate losses, enterprise owners strive to influence the operators by means of salary incentive. High-salary incentive can motivate the managers to pursue benefits for the company and make decisions from the perspective of corporate development. Thus high-salary incentive can improve corporate competitiveness.Based on the above theories, the paper identifies the index system to evaluate explanatory variables and explained variables. After this eight hypotheses are presented. Hypothesis A1: the first shareholder's share proportion is related to corporate competitiveness. Hypothesis A2: the sum total of the share proportions from the second to the tenth shareholder is related to corporate competitiveness. Hypothesis A3: the proportion of state-owned shares is negatively related to corporate competitiveness. Hypothesis A4: the proportion of legal-person shares is positively related to corporate competitiveness. Hypothesis A5: the proportion of liquid shares is not related to corporate competitiveness. Hypothesis B1: the proportion of independent director is positively related to corporate competitiveness. HypothesisB2: the combination of two functions is negatively related to corporate competitiveness. Hypothesis C: the degree of the management incentive is positively related to corporate competitiveness. The paper analyses the collected data of 170 listed companies in the electronics and information industry by utilizing the spss15.0 and Amos7.0 soft wares. Many statistical methods and research models are also applied. It is concluded that the hypotheses of B1 and C do not hold based on related analysis and regression analysis.Finally, the paper comes to its conclusion: 1 high ownership concentration and large proportion of state-owned shares are negative for corporate development and the enhancement of corporate competitiveness. Legal-person shares are motivated to supervise and thus can monitor the management, which is beneficial to improving corporate competitiveness. However, the liquid shares have no significant impact on corporate competitiveness.2 the proportion of independent director fails to positively affect corporate competitiveness. This is due to the fact that independent director does not fully exert its independence as well as the integration of functions as director and manager which leads to over concentration of rights. Both can cause obstacles to improving corporate competitiveness. 3 There is no clear link between the stimulating effect of annual salary on managers and corporate competitiveness mainly as a result of unreasonable salary structure for the managers in our country. Annual salary serves only to motivate the short-term behaviors of the managers. Thus the long-term incentive salary for the managers should be strengthened, such as stock option.Due to the limits of time and ability, there are certain limitations to the thesis, such as omissions while selecting the research variables as well as failure to generalize all the dimensions of corporate governance. Besides, the paper applies multiple linear regressions, taking no account of non-linear conditions, also one limitation which guides the direction into future studies.