A Positive Analysis Of Relationship Between Corporate Governance And Performance Based On Companies Of Different Ownership Structure In SME Stock Market

In SME stock market, the corporate governance of companies such as the structure of controlling shareholder, separation level of ownership and controlling, ownership concentration and market development are different from that in the main board market. According to the features of relationships between corporate governance and performance in SME stock market and the deficiencies of existing literatures, the paper uses the indicator which can reflect the comprehensive performance of the companies in SME stock market and partial analysis, to compare the features of corporate governance in SME stock market with that in the main board market, such as ownership concentration, the ratio of floating shares, the situation of Chief Executive Officer(CEO)duality, the ratio of independent directors, scale of Board of Directors and the shareholding of top managers.The result show that for the companies of different ownership structure, their features of corporate governance are different. The ratio of the largest shareholder’s shareholding in state-controlled companies is higher than the non-state-controlled enterprises, and is higher than the ratio of other large shareholders’shareholding, state-controlled companies of which checks and balances of the other major shareholders to the largest shareholder play a little important than non-state-controlled companies. In SME stock state-controlled companies the situation of Chief Executive Officer(CEO)duality is much fewer than non-state-controlled companies; the ratio of the shareholding of top managers for state-controlled companies is lower than non-state-companies. The result show that relationships between the corporate governance and performance is different for two types of samples. State-controlled enterprises should prevent too large shareholding, non-state-controlled enterprises may choose too large shareholding; for state-controlled the ratio of floating shareholding and performance is not relevant, and for non-state-controlled enterprises the relationship between ratio of floating shareholding and performance is positive; state-controlled ernterprises should make CEO and Chairman detached; for non-state-controlled enterprises, it is better to make Chief Executive Officer(CEO) duality; independent directors of state-controlled enterprises play their role, but independent directors of non-state-controlled don’t play their role; the size of the board of directors of state-controlled enterprises is too large to reduce performance, and the size of the board of directors of state-controlled enterprises is not relational with performance; for state-controlled the ratio of the shareholding of top managers is favorable for performancenot, and for non-state-controlled enterprises the ratio of the shareholding of top managers is unfavorable for performance.According to empirical conclusions, we get suggestions sa follows: state-controlled enterprises should optimise shareholding structure, encourage institutional investors or the public shareholding, and reduce the national shareholding, make more private property participate the oparation and management of companies, so that enhance the performance of state-controlled enterprises. At the same time, in small and medium-sized market we should strengthen the proportion of other major shareholders of state-controlled enterprises, and enhance the degree of controlling competition in the market to enhance checks and balances for the largest shareholder. Increase in the proportion of shares in circulation, and enhance the flow of binding on the company’s shareholders in order to give a positive impact on performance; we should strengthen the independence of the board of directors and reduce the size of the board of directors. We should make CEO and Chairman detached to increase the independence of the board of directors of state-controlled enterprises. Separation of the two grades will help strengthen the Board of Trustees acts on the supervision of managers and thereby facilitate the business activities of the sustained and healthy development, which also played a role in reducing agency costs. State-controlled enterprises large-scale of the Board of Directors impact the communication and coordination among the members of the Board of Directors, thereby affecting the performance of the enterprise and should therefore be to reduce the size of the board of directors; should strengthen the shareholding incentives. For non-state-controlled enterprises:we should strengthen the functions and powers of the board of directors, and establish the status of the board of directors, a clear control of the Board of Trustees of the functions and powers of decision-making role of checks and balances to prevent the board of directors reduced to a "display." In addition to the participation of independent directors to improve corporate governance promote independent directors to take part in the affairs of a company to enhance its role. At this stage as to increase the non-state-holding enterprises in the enterprise in the development of flexibility and innovation should be both chairman and general manager of the institutional arrangements for part-time; At the same time, the incentive should be to improve the management structure and selection mechanisms. Should be appropriate to reduce the non-state-controlled shareholding enterprises management, arising from the advanced management talents to join the management team, for the enterprise lay the foundation for the long-term development.