The Analysis Of The Relationship Between The Characteristics Of The Board And The Corporate Performance In Chinese Listed Companies Based On The System Dynamics

As the the key theory of the corporate governance theroy, the board governance theory has been discussed a lot. Analyzing the relationship between the characteristics of the board and the corporate performance to get the best characteristics for the corporate performance is a major way to guide the practice of corporations’s Board Governance. In order to analyze the relationship between the characteristics of the board and the corporate performance, many experts tried to use regressive analysis methods. However, they have not formed a unified conclusion due to the differences of the economic and social environment among different countries and the differences of actual situation among different corporations. So it is hard to find the appropriate theory to guide the corporate practice for the corporations in our country and especially for the state-owned enterprises. In this situation, this paper uses system dynamics model based on a specific company data to analyze the relationship between the characteristics of the board and the corporate performance. This paper tries this new way to solve the problem metioned above to guide the practice. Based on the literature reviews and the related theory survey, firstly, this paper gives the qualitative analysis of the relationship between the characteristics of the board and the corporate performance. Secondly, this paper does curve regression analysis between every characteristic of board of directors and the corporate performance based on the data in the annual report from 2008 to 2010 of the 300 listed corporations. Thirdly, this paper uses system dynamics model based on the data of CIMC and the functional relation from the curve regression to simulat board governance. After this simulation, this paper gives the policy recommendations for the CIMC’s board governance.There are six may policy recommendations for the CIMC:Firstly, the frequency of the board meeting should be in a moderate range. Seven times per season is the best for the CIMC; Secondly, the size of the board should be in a moderate range, too. Nine is good for the CIMC; Thirdly, because the impact pf the independent features for the board to the corporate perfomance is negative, the board independence should be enhanced; Fourthly, more kinds of the special committee,do better for the corporation; Fifthly, experienced and well-informed board Members are good for the corporate performance; Sixthly, The pay for the general manager is a bit more than needed, while the pay for independent directors is a bit lower than needed, so the CIMC should find a balance between them.Although there are several shortages, this paper finds a new way to analyze the relationship between the characteristics of the board and the corporate performance. There are several innovative points in this paper: Firstly, the research provides a new thinking perspective for the board governance. In this way, we can analyze the relationship based on a more specifical environment. Secondly, the analysis is based on the latest data, so this paper has the timeliness. Thirdly, this paper can also analyze some variables which are hard to collect so that we can make sure the analysis of characteristics of board of directors is integrated.