China's Commercial Banks' Governance Performance Empirical Analysis

The banking is an important branch in national economy. Bank's performance has very important effect not only in its healthy operation and development, moreover the macro-economy operation to the entire country. From the mid-1990s the corporate governance issues were widely discussed and drawing unprecedented attention. During the 20 years renovation of China's banks, some facial problems have been solved but some disadvantages are still existing in the corporate governance of China's banks which works as one of the most crucial factors of deciding the bank's performance. Along with the deepening of China's banking reforms, while faced with the challenge of full liberalization of the banking sector, how to structure the corporate governance structure, improve corporate governance mechanism and how to form a set of commercial banks of China corporate governance model become an important issue for China's banking reforms.In this paper, refer to domestic and international banking experience in corporate governance, we analysis the ownership structure, board of directors and incentive mechanisms respectively. At the meantime, we combined with the special nature of commercial banks in corporate governance for China's commercial banks in corporate governance to make an in-depth analysis and comparison, and try to explore China's banking sector corporate governance further development. We make a comparative analysis about commercial banks performance which had on list during 2006-2007 to prove the listing has a certain impact for corporate governance performance. And then chose China's major commercial banks as samples from 1999 to 2007, and collected 57 annual reports to make the empirical analysis about the bank's governance structure and its performance. The results showed that relation between equity governance of commercial banks and corporate performance is no significant indicating; different variable of Senior management governance has different effects on bank performance; board size is not an important factor affecting bank performance; the proportion of independent directors and the size of supervisory board can produce some positive impact on the bank's performance; the governor remuneration and governor turning have significant negative correlation on the performance of commercial banks.Considering the special nature of commercial banks in corporate governance we have analyzed, we think we should make the ownership structure more diversely and let private capital, foreign strategic investors and bank staff has also become one of the shareholders. In order to improve the efficiency of supervision we should improve the functions of the Board, establish the evaluation mechanisms and accountability systems for Board. we also should establish the performance-related incentive compensation system which with the high degree of transparency, and strengthen the external environmental governance. This paper can provide some suggestion for China's commercial banks to improve their corporate governance reform and has a reference of great theoretical and practical significance.