The Research Of The Relationship Between Corporate Governance And Types Of Risk Portfolio Of Enterprise

Risk management is the core of corporate governance; institutional arrangements determined the corporate goals and objectives, policy makers and the allocation of risk and return which are all carried around the risk. Corporate governance is also an important risk factor. Viewed from the existing literature, scholars researched corporate governance and corporate value or the relationship between corporate performance from several aspects of the ownership structure, board characteristics, corporate governance, executive incentive, and obtained the result that enterprise value was significantly affected by corporate governance structure through empirical methods. We believe that we should enhance corporate governance structure in the consideration of the various elements of enterprise risk based on the study of corporate governance and corporate performance.This paper studies the relationship between corporate governance and the company's risk portfolio, including financial risk and business risk. The paper will be in accordance with certain criteria for the classification of financial risk and operational risk by high or low, and the combination. This resulted in four combinations of different types of risk, that is, high financial risk and high business risk profile; high financial risk and low business risk profile; lower financial risk and high business risk profile; lower financial risk and low risk portfolio management. High financial risk and low business risk profile and low financial risk and high business risk profile are the same in terms of total risk to the company, and of which situation is more complicated, so this paper only studied the remaining two cases.This paper uses the manufacturing sector of Shanghai and Shenzhen 2007-2009 listed companies as subjects to make the regression analysis, excluding missing data and outliers. The results showed that the proportion of the largest shareholder, equity balance degree and the remuneration of senior executives and high-risk portfolio were significantly negatively correlated. The number of board size and board meetings with high-risk portfolio showed a significant positive correlation. Based on these results, the paper suggested that major shareholders should play the main role in corporate governance. Equity balance degree can inhibit corporate risk, increase the equity balance degree; appropriately reduce the number of directors and board meetings; build a sound incentive mechanism, make an appropriate increase in high executive compensation. In order to reduce business risk and enable businesses a sustainable development, we should construct a reasonable corporate governance structure.