Investors Legal Protection And Banking Corporate Governance

According to the principal-agent theory, general corporate governance problem is brought by conflicts of interest between owners and managers. Internal governance mechanisms (such as equity structure, board and management compensation) play an important role in reducing agency cost and improving firm performance. Not only single internal governance mechanism but also an interaction of several internal governance mechanisms depends on external legal system (mainly on the law protection of investors) in varying degrees. Therefore, research on the law protection of investors has important practical significance in the mechanism and performance in corporate governance, and provides a theoretical basis and empirical support for the formulation of related laws and regulatory policies.As a financial intermediary with special features, characteristics of commercial banks (special capital structure, opaque contract and strict regulation) cause the complexity of the "Agency Problem" in corporate governance, which is the "Agency Problem" of shareholders and managers, shareholders and creditors, shareholders and regulators. Therefore, the goal of corporate governance in banks presents a plurality of values (safety, liquidity, profitability). Despite the fact that internal governance is still the vital corporate governance mechanism in banks, the law protection of investors as the alternative of external market mechanism cannot be ignored, which can effectively avoid the systematic risk of banking.This thesis constructs an index of the law protection level of investors with years of1999-2010and selects14listed Chinese banks to do a qualitative comparative analysis (QCA), to focuses on the effect of the law protection of investors and the traditional internal governance mechanism of corporate governance on three banking performances. The result shows that the law protection of investors is more important than the internal governance mechanism in improving performance in corporate governance. In the positive effect, improving the law protection of investors is key to corporate governance. In the negative effect, we should pay attention to non-state owned property and the low management compensation. Banks should be more inclined to concentrated equity structure, high compensation and high rate of independent directors.