Managerial Power, Board Structure And Corporate Performance

The source of the principal-agent problem is the separation of ownership andmanagement, which is an important feature of the modern corporate system. TheBoard and Management are separately on behalf of the interests of the owners andagents, therefore, the conflict comes out between the two arises. According to theacademic study on corporate governance, the core of the company’s internalgovernance mechanisms is the configuration of power, because reasonable andeffective distribution of power can improve corporate performance. The Board has thepower of supervision of manager and control management, while the management hasthe actual decision-making powers of the operating company. Scholars have differentopinions on the checks and balances between both kinds of power.The paper focuses on the mutual relations among the powers of the ManagerialPower, Board structure and company performance. For more comprehensive study ofcorporate performance, the corporate performance is divided into two aspects ofaccounting performance and market performance. On the basis of the relevant theoriesand the actual situation of China’s listed companies, the relevant managerial powerindicators are chosen. This paper selects panel data from the listed companies on themain board in China in the period of2006to2010to do the regression analysis.Finally, the results of this study, suggestions and revelation are summarized.The results of this study show that:(1) There is no significant correlationbetween the Managerial power and the company’s accounting performance; both theunity of the Managerial power and the Board and managerial ownership has asignificant correlation with market performance.(2) The Board size does notsignificantly affect the company’s accounting performance; there is a significantlynegative correlation between board independence and corporate accountingperformance; both the board size and the board independence are significantlynegatively correlated to the company’s market performance.(3)The structure of theBoard has no obvious influence on the managerial powers.(4)The Board structure hasa significant effect on sensitivity between some of the variables of the managerialpower and corporate performance.