Research On The Relationship Between Board Features And Corporate Pefrormance Of The Listed Companies

Board of Directors is the core of corporate governance, so how its governancemodel is becoming increasingly important in affecting corporate performance, andit is required to build an effective board of directors for modern corporategovernance. As think tank of the corporation, board of directors plays a significantpart in making big decisions, so an efficient board of directors and its accuratedecisions may contribute to sustainable development of the corporation byassisting managers making wise decisions. With the reform and development ofChina’s listed companies, the role of board of directors is more and moresignificant, how the board of directors is managed has become a hot issuecommonly studied by scholars. The pharmaceutical industry is developing veryrapidly, and there is a gap between Main-board Market companies and Small andMedium-sized Market companies in company size, profitability and other aspects,so we study the issue separately. There is no such study from pharmaceuticalarea until now, so this study enriches the theory, and also provides ideas andmethods board of directors of listed companies in pharmaceutical industry mainboard and small and medium-sized board.Firstly, the article gave a brief introduction of backgrounds, domestic andoverseas relevant studies, research methods, research considerations, andresearch itself. Secondly, the relevance between feature of board of directors oflisted companies in pharmaceutical industry main board and small andmedium-sized board and the companies’ performance is studied and analyzed bydocumentary research method, normative research method, empirical researchand comparative research methods in the article. It is innovative to study listedcompanies in pharmaceutical industry. Also, it is a new perspective to studypharmaceutical industry main board and small and medium-sized boardseparately. Therefore, the article takes the study of feature of board of directors inpharmaceutical companies to a new area. To do the study, the article selectedcompanies’ performance statistics and board of directors statistics from the MainBoard of the Shanghai Stock Exchange and main board and small andmedium-sized board of Shenzhen Stock Exchange. With the help of mainingredient analysis method, the article analyzes12selected financial indicators inthe listed company’s profitability, operational capacity and ability to grow, andextracts the main ingredients affecting listed companies’ performance to form acomprehensive evaluation model of the performance of listed companies, thenfeature of board of directors can be analyzed with the aid of descriptive statistics.Finally, the article adopts multiple linear regression model to test whether there isobvious relevance between companies performance and company board size,number of independent directors, the proportion of independent directors, theremuneration of the Board, the number of board meetings. The study result shows, in main board market, a significant positive correlationbetween board size and companies’ performance, a significant negativecorrelation between number of independent directors and companies’performance, a significant positive correlation between the proportion ofindependent directors and companies’ performance and no correlation betweenhe remuneration of the Board, the number of board meetings and companies’performance. However, in pharmaceutical industry small and medium sized boardmarket, there is no correlation between the five factors of board of directorsmentioned above. Based on present condition of pharmaceutical industry andresults of linear analysis, the article gives the following suggestions: the impropersize of China’s board of directors of pharmaceutical industry should be correctedto be equivalent to company size, so that board of directors can not only make asufficient discussion of strategic decisions but also minimize company’s actingcost. The principle like " the bigger, the better" is not suitable for board of directors.Appointment mechanism of the independent directors should be reasonable, andthey must be competent and experienced. The appointment process must be fairand open. Aside from remuneration incentive, companies should put weight onother types of incentives to keep incentive system being a reasonable structure.Board of directors of medical industry listed companies does not performeffectively all the time, and efficiency and quality of board meetings should beimproved.