The Research On The Relationship Between Financial Risk And Corporate Governance

Corporate governance is all cultural, institutional, legal and institutional arrangements about the enterprise control system, supervision system, organization and distribution of benefits. Financial risk is an economic phenomenon of the company unable to pay or refinance maturing debt or the cost. The majority of scholars are focusing how to improve and enhance corporate governance, how to prevent and predict corporate financial risk.This paper studies the relationship between corporate governance and financial risk, discuss raising the level of corporate governance whether help businesses get rid of finance business risks or not. This article finds that the company generated financial risk because its corporate governance is not perfect and imperfect. Good corporate governance is the drive of the company's good performance. It can reduce the possibility that company faces the risks .The failure of corporate governance will lead to higher agency cost of companies, the lack of checks and balances of management power will allow the company prone to financial risks. In other words, corporate governance should have a risk effect, that it may affect the company's financial risk. For modern enterprises, having a good level of corporate governance is conducive to enhancing the viability of enterprises and improving operating efficiency, thus avoiding the occurrence of corporate financial risk.This paper aims to study the problem of systematic empirical research to reveal the financial risk caused by deep-seated reasons. This paper researches from the company ownership structure, executive characteristics, board characteristics, using our stock market listed companies in 2007-2009 as the research object, and using regression analysis to reflect the company's financial risk profile. By researching a series of variables to describe the effect of the corporate governance of the enterprise's financial risk .Through research the relationship between the various governance variables and financial risk to find key variables of the significant effects of financial risk. The empirical results show that our corporate governance structure of listed companies has a certain impact on corporate finance risk .This research has the certain enlightenment significance for people further understanding the role of corporate governance and reasonably constructing corporation governance structure to effectively reduce the enterprise financial risk.