An Empirical Study On The Relationship Between Corporate Governance Mechanism And Performance Of Chinese Listed Banks

After the shock of the global financial crisis in 2007, the problem of corporate governance has come into people's vision again. Through series of study, the conclusion tells us the failure of corporate governance of financial institutions is the main reason leading to this crisis. Furthermore, as the most important financial institution, the fragility of corporate governance of banks is also a major reason causing the crisis. Therefore, the stability of financial system and society mostly depends on improving the corporate governance of banks and strengthening the power of risk prevention.Until the end of 2010,16 Chinese commercial banks have been listed successfully. The listed banks have played a more and more important role in the banking. Their profitability and sustainable development is very significant for the development of financial system and macro-economy. Healthy corporate governance, to some extent, determines whether the listed banks can win in the fierce market competition. Therefore, how to improve the corporate governance is a big problem for the listed banks and it is crucial for the development of Chinese banking.The true meaning of establishing a healthy corporate governance mechanism is to make a better performance and make more wealth of banks, in order to maximize the income of investors. Another problem of banking is which indicator to choose to measure the performance of banks. The traditional indicators, such as after-tax net income, ROA, ROE, EPS, P/E, have their own defects that may cause many mistakes leading to bad performance of banks.This paper brings Economic Value Added (EVA) into study, which is a brand new indicator of performance. EVA embodies the meaning of capital cost and relates risk and capital firmly. And it offers a more precise and thorough tool to measure the performance of banks. Also, EVA is widely used in many stages in banking. As the successful development of EVA, it is also used in the corporate governance of banks. As an important indicator, EVA makes the interests of every stakeholder begin to converge.This paper, which is based on many relevant literatures, brings EVA as the indicator of performance into the study and builds a multivariate regression model to research the relationship between the corporate governance and the performance of the listed banks.The conclusions are as follows:The shareholding ratio of the largest shareholder, the state-owned property, the size of board of directors, the size of board of supervisors, the shareholding ratio of strategic investors are significantly positive related to EVA of the listed banks; The shareholding ratio of the first 10 shareholders, the times of board of directors meetings are significantly negative related to EVA of the listed banks; The correlations between the times of board of supervisors, the senior managers' compensations and EVA are not significant.Consequently, this paper gives several advices based on the conclusions on how to improve the corporate governance of the listed banks.