An Empirical Study On The Structure Of Board Of Directors And Its Governance Performance In China

Board of directors is the core of corporate governance and play an important role in the system of corporate governance as a bridge to connect the management and the owners.Directors which are elected in the shareholder’s meeting constitute the board,controland supervise the company management on behalf of shareholders.The board is responsible for making the company strategy and decisions. The formation and operation of the board of directors is significant to the development of the company,thus whether the director system function healthily has become a decisive factor to the corporate performance.Board structure and governance performance has always been a dedicated field of research in academia at home and abroad.In recent years, with the progress of China’s market-oriented reforms and the improvenent of the modern enterprise system as well as corporate governance mechanism, it becomes more and more important to research and explore optimal board structure for Chinese companies.On the basis of previous studies,this study which choose ROE as the indicator of corporate governance and400companies listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange as the study sample investigates the relationship between board structure and corporate performancewith the method of multiple regression analysis to find out whether and how the board size, the proportion of independent directors, the board leadership structure and the board of directors shareholding affect the corporate performance. This study also reveals the influence of company scale to the relationship between board structure and corporate performance by comparing the two sampledivided by scale.The empirical results show positive correlations between board size and corporate performance as for small-scale companies and negative correlations as for large-scale companies.Positive correlations is showed between the proportion of independent directors and corporate performance as for small-scale companies and negative correlations as for large-scale companies.The duality of board leadership is better for the improvement of the performance of small-scale companies,but it turns opposite as for large-scale companies.Directors’ shareholding help to improve the performance of small-scale companies,nevertheless there is no apparent correlations between the directors’ shareholding and corporate performance as for large-scale companies. The purpose of this study is to explore the optimal board structure for Chinese companies and provide recommendations for the performance evaluation,corporate governance as well as the board structure design.