Board Characteristics And Corporate Performance Empirical Research

With the divestiture of company ownership and management rights in the process of modern corporate system development, the Board order to mediate the shareholders and the management bodies of the principal-agent problem emerged, the Board became the core of the corporate governance system. However, because most of China’s listed companies from the restructuring of state-owned enterprises, there are a large number of state-owned shares and legal person shares can not flow, resulting in a listed company external M&A market is difficult to form, the corresponding market of managers and independent directors is not perfect, and then led to the absence of an effective external incentive and restraint mechanisms to oversee the management’s behavior. As a result, the board sets within a reasonable or not directly related to effective board governance mechanisms, thereby affecting the improvement of company performance. This paper first reviewed the research status on the board characteristics and corporate performance, respectively, analysed the relationship between board characteristics and corporate performance based on the principal-agent theory, modern stewardship theory, resource dependence theory and dynamic endogenous theory. In the empirical study, this paper put forward the assumption of intertemporal impact of board independence and board size with corporate performance. The paper used return on assets to measure corporate performance, used the proportion of independent directors to measure the board independence, used the number of directors to measure the size of the board, selected appropriate control variables, established model to explore the relationship between board characteristics and corporate performance.This paper selected the517companies listed in Shanghai and Shenzhen in the period of2001-2010as the sample data, constructed autoregressive lag cross-model, used the GMM Estimator to draw the following conclusions:The current board characteristics and the current company performance is not significantly related; in the short term the proportion of independent directors did not significantly affect the current corporate performance, but in the long run, the independent directors can promote the improvement of corporate performance, in turn, the pre-company performance negatively affect the current proportion of independent directors; the pre-board size has no effect on the current company performance, and the pre-company performance did not significantly affect the current board size.