Corporate Governance And Corporate Investment Decision-making Efficiency

Investment is the key driving force behind the continual growth of a corporation. The level of investment efficiency directly determines the quality of a corporation's growth, even its survival; and the corporate governance is exactly the important mechanism affecting the investment efficiency of a corporation. In the present treatise, the example of Dawnrays pharmaceutical (holdings) ltd.(hereinafter referred to as Dawnrays Group), the listed company, as an individual case, has been chosen to analyze, in a detailed manner, the relationship between the corporate governance and investment decision-making efficiency by means of case study methodology. In the first place, we shall use the theories of strategic management and corporate growth for reference, in order to theoretically analyze the relationship between the corporate governance and investment decision-making efficiency, providing the ensuing paragraphs with a theoretical framework that can be used for reference. We, then, shall make a detailed case analysis of Dawnrays Group by using the above-mentioned framework.In the case study part, say specifically, first of all, we shall describe the development course of Dawnrays Group, analyzing the major causes that brought about the inefficiency of investment decision-making by reviewing the company's development history, from the rapid expansion with notably high returns in its early stage of development, to the situation of fluctuations by big margins with regard to the company performance, and the year-by-year sliding profit margins. Also, a crosswise comparison has been made with Shenzhen Salubris Pharmaceuticals Co., Ltd., a pharmaceutical company of the same kind, showing the significant disparity that these two companies present in terms of their product structure. The viewpoint has been posed as such that in the event of an unsound corporate governance structure, the rigid, founding management team would cause the decline in Dawnrays Group's ability to adapt to new environments, leading to the slip in corporate investment efficiency. Moreover, analyses concerning scores of M&A activities taking place as a result of intensified competition engendered by existing environmental conditions, policy changes, and enhanced quality system standards in pharmaceutical industry, have been made, indicating to Dawnrays Group, as a private enterprise under conditions of scarce resource allocation, who would transfer resources to items of highest value, the needs to optimize its corporate governance structure, vigorously respond to the environmental changes; in respect of the investment decision-making, adjustment should be made according to the variation of external environments, and the efficiency of investment decision-making should be improved through effective regime design, development proposals in line with the actual state of Dawnrays Group should be set forth in conjunction with the company's strategies and strategic transformation, ensuring the company reinforced core competitiveness and sustained, sound development.