Emprical Research On The Relationship Between Board Characteristic And Firm Performance

As the core component of internal corporate governance, the board of directors is an important decision-making and supervision organization. It exercises corporation property right and direct management right, and comprehensively and directly participates in decision and management on corporate major events. The board of directors is effectively exerted in corporate governance, which is the key to the effective implementation of corporate system. The theoretical and practical circles have focused on the research on the relationship between the board characteristic and firm performance. This paper aims to find a better governance mechanism to boost the firm performance through the research on this relationship.Firstly, this research gives a relevant literature review. Secondly, this paper recommends relevant theories of the board of directors and corporate governance. Then this paper proposes the research assumption on the basis of theoretical research and building a regression model. This paper mainly bases on the data of agricultural listed companies over the 2004 -2006 period, and uses firm performance indicator which determined by factor analysis as dependent variable, board size, the proportion of independent directors, corporate leadership' structure, the frequency of the board conference, the reward of directors, the share proportion of the board members, the age of directors, the experience of directors as independent variables while the control variables are company's size and corporate ownership structure. This paper uses SPSS software and Eviews software to make empirical analysis.The result of empirical study shows that the board size and firm performance presents distinct shape U, the proportion of independent directors and duality is not remarkably relevant with firm performance, and the frequency of the board conference, the reward of director, the share proportion of the board members, the age of directors and the experience of directors is positively correlated with firm performance.According to the empirical conclusion above, this paper puts forwards some suggestions to perfect board mechanism and improve its efficiency which include setting the board size in reason, perfecting the system of the independent director and directors' incentives and optimizing demographic characteristic.