An Empirical Study On The Relationship Between Corporate Governance And Corporate Performance

Establish a sound corporate governance structure is the core concept of the modern corporatesystem. A growing number of countries and organizations have developed a corporate governancemechanism and its principles in recent years, and many countries seek corporate governance as aprimary means to improve corporate performance, and then enhance the company’scompetitiveness in the market. The reason why the issue of corporate governance is of so muchimportance is that from the macro level, a sound corporate governance system in the Chineseenterprises is able to withstand the future crisis and meet the challenges of globalization, and helpthe enterprise to grow bigger and stronger; from the micro-level, the importance lies in the aspectof investing and government regulating as well as listed companies themselves in their owndevelopment needs.This paper analyses the relationship between corporate governance and corporateperformance based on1548groups of samples of listed companies from the year2008to2010.Corporate governance indicators include Ownership governance, the governance of the Board ofDirectors and Supervisors and Managers, the relationship including their early relationship, currentrelationship and post relationship.This paper primarily fulfilled the following work:Firstly, the paper summarized the understanding of the concept of corporate governance ofresearchers worldwide, combined the relevant theory and literature. Then summarized theempirical results of the relationship between corporate governance and corporate performance;Secondly, the paper analyzed the current situation of corporate governance of the companieslisted on the Shanghai Stock Exchange. The paper found that there are still many rooms forimprovements of corporate governance. Then the paper did an empirical study of the relationshipbetween corporate governance and corporate performance through which we know the mostimportant governance factor. Finally, the paper made several conclusions as follows:(1) Executive compensation is the most important governance factor; it is the only factorwhich showed a significant positive correlation with performance in three stages while the Boardleadership structure factor is the only factor which completely has nothing to do with corporateperformance;(2) Ownership concentration, the Board of Directors and the Board of Supervisors are relatedto corporate performance to some degree;(3) The paper also discovered the due diligence problem of sample companies’ Board ofDirectors and the Board of Supervisors, which is reflected in the descriptive statistics analysis;Finally, the paper gives some targeted recommendations to improve the governance structure and discusses the main contribution of this paper, the limitations of the study and future researchprospects of the paper.