Research On Relationship Between Top Management Turnovers And Corporate Performance Of Listed SMEs In China

Small and medium-sized plate corporation is the new force of promoting independentinnovation in China. Its healthy development plays a decisive role in the perfection of thecapital market and enhances national economic vitality. Whether the corporate governancemechanism can effectively change the incompetent executives and successors can bringperformance improvement for the company or not, is an academic research hotspot. It is alsoone of the methods to test corporate governance mechanism is effective or not. The articleaims to solve the following two problems: one is what’s the relationship between China’slisted SMEs’ top management turnover and firm performance; two is a test of thosecompanies’ corporation governance mechanism is effective or not.This paper summarizes the analysis of existing literature, combined with theprincipal-agent theory, human capital theory, entrepreneur theory and stakeholder theory.Develop the literature review from the performance effects on top management turnover andexecutive turnover on subsequent performance. Induce the annual reports’ disclosure ofreasons why listed SMEs executives turnover, combined with the company performance andexplore the underlying causes of change. Select393year-company from listed SMEs in2008-2009as the study sample. Determinate sample variable, use descriptive statisticalanalysis and Pearson correlation coefficients to analysis variable preliminarily. Combinedwith the actual situation of domestic listed SMEs, take executives changes as the dependentvariable, company performance as variable, firm size, financial leverage, the board ofsupervisors shareholding etc as control variables to construct Logistic regression model. Then,take executives change after two years adjusted ROA and ROE as the dependent variable, theexecutive turnover as variable, ownership structure, the board of supervisors shareholding,firm size, financial leverage etc. as control variables for multivariate linear regression.The study shows that the lower domestic listed SMEs’ corporation performance, thegreater possibility of top management turnover; and executive changes have no significanteffect on subsequent firm performance in a period of one year. There is a significant declineduring a two-year period. Corporate governance is not ideal. Finally, according to theconclusions above, put forward recommendations, such as perfect our external managermarket, listed SMEs standardize the employment mechanism, optimizing equity structure,improving the efficiency of the board of supervisors, expand the scale of the company, abalanced debt paying ability.