Managerial Ownership, Independent Directors And Corporate Value

Governance mechanism is very vital for building modern enterprise system and enhancing efficient of companies. A lot of people and organizations make much effort explore and improve governance mechanism continually, many achievements have been obtained. Managerial Ownership and independent director system are the two of achievements. Managerial Ownership and independent director system are introduced in our country in order to improve governance mechanism. Do managerial Ownership and independent director system effect the performance of Chinese listed firms? People have different conclusions in prior studies. On the basis of prior studies, we further study the impact of managerial ownership and independent director system on governance mechanism of Chinese listed firms.This study examines the endogenous relationships among managerial ownership, the proportion of independent director and corporate value using 372 A-share Chinese listed firms'data in 2006. We use OLS and 3SLS to analyze the data respectively. In order to avoid the effect of different independent director levels, we choose independent director level equaling 1/3 which is CSRS asks for as critical point, and we have three kinds of data. This paper has three conclusions.1. Managerial ownership and corporate value are co-deterministic, managerial ownership is positively related to corporate value, vice-versa.2. When the proportion of independent director is more than 1/3, the proportion of independent director and managerial ownership are endogenously determined but weakly significant, and when the proportion of independent director is not more than 1/3, they do not have significant interrelationships.3. When the proportion of independent director is more than 1/3, the proportion of independent director and corporate value have significant interrelationships, the proportion of independent director is negatively related to corporate value, and corporate value is positively related to the proportion of independent director; and when the proportion of independent director is not more than 1/3, they have insignificant interrelationships.