Internal Corporate Governance And Performance

From the mid-1990s,the corporate governance issues have been paid attention widely by people. Especially after the Asian financial crisis in 1997,the US Enron coporation and Worldcom corporation scandals in 2001, and the US sub-loan crisis lately,corporate governance issues have been highlighted as the core element related to global financial stability and economic development. Banking industry is the principal part of financial system. In recent years,banking industry of China has great changes. But the corporate governance of China's commercial banks is in the primary stage,we must perfect it in order to compete with foreign banks. Because of the special characteristics and strict monitoring,commercial banks' external governance has little function,the internal governance is the core.Therefore,this article focuses on the commercial bank's internal governance and its influences on performance.This article mainly discusses from the ownership structure ,board of directors,board of supervisors and executives' salary. It puts forward the suggestions of commercial banks' internal governance through the theoretical and empirical analysis of impact of China listed banks' internal governance on performance,combined with their status quo and defects. The empirical analysis points out that the state-owned character and controlling capacity of the top shareholder have positive impact on performance,the top five shareholders' sharing ratio and the size of board of directors have negative impact on performance. In addition,the ratio of independent directors,the ratio of executive directors,relative factors of board of supervisors all have no significant impact on performance. The analysis show that China's listed banks have higher ownership concentration and bigger size of board of directors. And the system of independent directors,board of supervisors and salary of executives fail to function properly. In response to these questions,this article put forward four suggestions about the internal governance of China's commercial banks :adjust the ownership structure,set up board of directors with high quality,give greater powers to board of supervisors,set up executive incentive system with high quality.