A Study On The Relationship Between Board Capital And Firms Growth

As the connection between shareholders and managers, board of directors plays animportant role in corporate governance. The effectiveness of board depends on its capacityto adequately fulfill the functions of supervision, strategic and resource management; theability of directors is crucial to the performance of the board. The thesis chooses from thetwo aspects of human capital and social capital to deconstruct the board capital andexploratory analysis of the relationship between our country board capital and firmsgrowth.First, the thesis analyzes the board capital structure in our country which contains twodimensions: the board human capital and the board social capital. The board human capitalincludes the average level of education, average age, professional backgroundheterogeneity and occupational background heterogeneity; the board social capital includesthe internal relations of the board, the board of network relations political association andaverage reputation. Second, the thesis builds up the serious evaluation indicators of firmgrowth, including earnings capacity, development capacity and solvency. Third, accordingto the board capital and the firm growth, the thesis comes up with the conceptual model.Finally, the research hypotheses are put forward based on the relationship between theboard capital and firms growth. After using the structural equation modeling analysismethod, the thesis verifies the correctness of the hypotheses and draws the appropriateconclusions.The results of the study show that: there is a positive correlation between boardcapital and the growth of firms. Specifically, the board human capital is positivelycorrelated with the company’s profitability and solvency, and has little to do withcompany’s development capabilities; the board social capital and the company’sdevelopment capabilities have a positively correlated relationship, and there is nocorrelation with the company’s profitability and solvency. Based on the above conclusions, the thesis indicates that domestic board capital of listed companies need to be given greaterattention, if listed companies in China want to maintain a competitive advantage inincreasingly changing environment and long-term development, they should expandinvestment on the board capital. In addition, the study also provides a reference for theconstruction of board, the optimization of board and the ability of the board.