| Modern companies advocate two-right separation, that is, the separation of ownership and control power. Under this condition, the relationship between the shareholders and the managers is principal-agent. In this relationship, as the principal, the shareholders always want their managers, as the agent, to manage their company by maximizing their own benefits. However, for the managers, there exists a moral hazard problem. At the same time, there is the problem of asymmetric information between the shareholders and the managers. So, in order to control the management, the shareholders need some certain mechanism to supervise and restrain the managers.By March 2011, there were altogether 229 companies that were classified as ST companies in Shanghai Stock Exchange and Shenzhen Stock Exchange. This kind of company refers to that has abnormal financial condition. When a company is listed to ST, it will mean a failure of the operation and management to some extent. Jensen has pointed out that, in the past two decades, the internal control mechanism in US big companies was a "complete failure", in which the problem is out of "the Board".The Board of Directors plays a central connecting link role in corporate governance. On the one hand, as the trustee, Board of Directors is responsible for the Shareholders conference, and in order to maximizing the shareholders’benefit, it should complete all the requirements of the shareholders in managing and operating the company. On the other hand, there is a number limit in Board of Directors, so it is impossible for directors to complete all the business activities of the company. At this point, as the principal, Board of Directors need entrust managers to carry out specific work, while they need supervise the manager’s operating results. To some extent, Board of Directors is under control of the general meeting of the shareholders. However, due to the fact that it is not frequent to convene general meeting, the Board itself has its appropriate flexibility. There is no need to show the importance of the Board of Directors and General Meetings of Shareholder anymore, however, whether they can play the role well, the corresponding elements cannot be overlooked.1. The main contents of this articleThe main contents include the following four parts:The first part describes the background, the meaning and the purpose of writing this article, it gives a simple introduction on the basic structure of corporate governance, and it also states the role of Board of Directors and General Meetings of Shareholder in corporate governance. This part gives a brief introduction to some related theories, including Principal-agent theory, stewardship theory and resource dependence theory which are three basic theories to the board of directors. Among these theories, the mainstream theory is the principal-agent theory, most research consider it as the basis to expand the features of the structure of Board of Directors. In addition, there are Board action theory and human capital theory. Board action theory began in the early stages of reflection on the principal-agent theory, it believes that the board is not only a control mechanism, it has a broader role, particularly after the introduction of non-executive directors. This theory strengthens not only the control of operators, but also that the board should provide powerful management support to corporation’s decision. Accordingly, the Board action theory considers that the main function of the board of directors should be reflected in two aspects:efficient decision-making services and effective supervision. Human capital theory states that the continuous development and accumulation of human capital can directly promote the increase of material capital.The second part reviews some relevant results about how the domestic and external board of directors and major shareholders do effects on the company’s operating performance, including board size, board composition, outside directors, inside directors, board meeting frequency and attendance, the board leadership structure, the directors incentives system, resolutions of the board, executive appointment and remuneration and turnover, and the relationship between large shareholders control and corporate performance.The third part mainly does relevant statistical study from the aspect of empirical method. In this study, we mainly do statistical analysis on how the relevant indicators of chairman of the board, independent directors and major shareholders influence the business performance. The main indicators we investigated include the graduate schools of the chairman, educational background, specialty and age, the proportion of independent directors, the educational background of independent directors and the proportion of top ten shareholders. This paper selects 1278 ST and *ST status corporations from Shanghai and Shenzhen A-share market in 2009 as the bad performance corporation samples, in accordance with the principle of 1:1 and by using CSMAR database, we are to find a good performance group paired samples, altogether 254 samples. Based on these dates, we can establish a Logistic regression model, and then we can find the relationship among the working capacity of chairman of the board, independent directors, major shareholders and corporate performance.Through this empirical study, we can find that only two factors can influence corporate performance among all the indicators, those are the chairman’s graduate school and the proportion of top ten shareholders, the rest 12 indicators do nearly nothing effects on corporate performance. The personal circumstance of the chairman and the independent directors influence corporate performance in an unobvious way, the independence of corporation’s board also influence corporate performance in an unobvious way. In comparison, the company’s shareholders ownership concentration affects on corporate performance obviously. In China, no matter what’s the type of the corporation, ST or no ST, the personal factors of the chairman, the proportion of independent directors, respective industries of independent directors have high homogeneity with the above similar corporations. Even though we cannot deny that these factors function in the company’s operation and management, they do not affect the core elements of business performance. It can be seen in China’s listed companies that the construction of the company’s governance structure is far from perfect, and the board doesn’t play the correct role what it should do, the independent director system is only a decoration, we need to increase its development efforts and effectively implement its role. The governance obstacle of Chinese company lies in that we always put people before system, and the key problem is not the system but the implementation.The fourth section describes the characteristics and limitations of the study.2. The main contribution of this paper 2.1 The characteristics of this studyThrough empirical research, this study has the following three features:First, at present, although there are lots of researches on the company’s governance structure, they haven’t reached a consensus on problem raised from this topic. Theses researches always pay more attention on corporate governance framework and improvement of the rules, but ignore one important indicator of executor of the system as "people". Therefore, the methods used and conclusions drawn from theses researches are biased from the overall point of view, not the key solution to the problem.In this paper, when doing research on how the board influence on corporate performance, we will try increasing doing research on person in the board. The Board is constituted by people, so any decision and all things should be finished by people. Only after understanding in what way the characteristics of key members of the board influence on firm performance, can we improve the board in a better way, and help the company to achieve better development.Second, in studies of the effects on corporate performance, this paper attempts to reference a multi-level factor, not only analyzing the chairman as operator in principal-agent relationship, but also we analyze the major shareholder as a shareholder representative groups, at the same time, we put a special group of the board as the independent director into our consideration. We have done a comprehensive analysis of multiple factors, not only analyze on factors which can influence corporate performance, but also find the deep relationship among these factors, then we identify the deeper reasons.Third, we study on the samples. Since the 2010 Annual Report is not completely out, so this paper subjects to data of 2009 annual report announcement. On the basis of ST company information, and in accordance with the principle of a 1:1 ratio, we select the appropriate size of the industry with non-ST company data, and finally we obtain a valid sample of 127 pairs.2.2 Thinking of follow-up study of this paperFirst, "ST" evaluation problem. China has begun to open up "ST segment" for only a few decades, and the judgement on "ST Company" is not very mature. Although some enterprises have not yet joined the ranks of ST companies, their production and management has been difficult. In our selected non-ST companies, there may be some companies which have exposed some practical operating problems.Second, data accuracy. As the information disclosure system of listed companies in China is not perfect, and most variable indicators used in this paper are of non-financial indicators, some listed companies did not release the complete data, for example, the graduate school of chairman, his major, so we can only estimate these indicators according to certain principles. While there may be some error in our estimates with the real situation, and thus have an impact on the empirical results.Third, selection problem of the variable indicators. In this article, although we choose 14 variable indicators including 3 major ones (Chairman, independent director, the proportion of top ten shareholders) and 5 subclasses (A, B, C, D, E), the variable is not exhaustive. As to say chairman indicator, in addition to personal characteristics, we may need to take some other important factors into our consideration. Besides, this paper focuses on the influence that the board makes on company’s operating performance, which is just a simple analysis of the major shareholders accounting for the impact on corporate performance, not down to their shareholders’personal characteristics. Also, this article only gave a qualitative but not a system analysis of quantitative analysis. According to these disadvantages, we need to learn and improve it in the future.Fourth, the research methods. In research methodology, this paper used only the logistic regression model, and there is a lack of comparison with other models. So we can try to learn and use some other advanced computing technology to improve the quality of research in the future. |
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