Study On The Relationship Between The Internal Governance And Performance

With the constant rethink of the recent two financial crises, the corporate governance of commercialbank is concerned by more and more people. For the bank, external governance mechanism is established,because it is provided by government and market. Thus, because China’s list banks can control and affectfactors of internal governance mechanism, it is very necessary to research the relationship betweencorporate internal governance and performance.The paper tends to explain and verify the relationship between performances of China’s listed banksand the internal governance’s three aspects, which are ownership structure, board structure andmanagement compensation. The methods used in this essay mainly include theoretical research, empiricalresearch and the SCP framework analysis. This article first reviews the general theory of corporategovernance, which mainly concludes the meaning of corporate governance and related theories, andreviews the related literatures of the relation between corporate governance and corporate performance;Then the essay analysis the main different of corporate governance between bank and other enterpriseaccording to the particularity of the bank; And then the paper briefly reviews and analysis the history andcurrent situation of the China’s commercial bank’s corporate governance; Finally the paper empiricallytests the relationship between internal governance and performance of China’s11listed bank and bringsforward explanations and proposals.The empirical results of the essay show that,1) The shareholding ratio of the top ten shareholders andlisted bank profitability are significantly negative correlation, and bank risk control ability are positiverelated;2) Managerial shareholding ratio is notable positive related to the listed bank’s profit ability;3)Thescale of board in our country’s listed banks is negatively related to the bank performance;4) Scale of theboard of supervisors to the banking risk control ability is positively correlated;5) Independent directorratio to the bank performance is significantly correlated;6) Management salary to the bank profitability issignificantly negative. The article puts forward the corresponding explanations and suggestions in lastpart.In current stage, the following practices contribute to the improvement of the performance of theChina’s banks:1) Under the premise of keeping state-owner’s control rights, to dilute ownershipconcentration degree by expanding the scale of bank;2) In the manager’s incentive way, to increase theproportion of equity incentive, and to reduce monetary reward proportion;3) To reduce the number ofdirectors;4) To appropriate increase the number of the board of supervisors;5) To increase theindependence of the board of directors.