Study On The Impact Of Corporate Governance On Recovery From Financial Distress In A-Share Manufacturing Listed Companies

Most domestic scholars regard implementation of special treatment by the stock exchange as a symbol of listed companies falling into financial distress. They regard it as the standard of recovery from financial distress that those get cancellation of special treatment by the stock exchange in two years. Since the implementation of the stock special treatment, a group of A-share manufacturing listed companies in Shanghai stock exchange and Shenzhen stock exchange with abnormal financial condition get special treatments every year. People gradually realize the financial distress problem is the trouble that every listed company may encounter, and pay more attention to how the financially troubled listed companies can recover from financial distress as soon as possible? At present, domestic scholars’ researches on financial distress recovery are relatively little, and the existing researches about financial distress cannot meet the listed companies’ pressing practical needs. A well internal governance mechanism is helpful to the improvement of the performance of listed companies. So, from the perspective of corporate governance, this article explores what kind of company internal governance structure contributes to the financial distress recovery of A-share manufacturing listed companies.Based on the literature study and theoretical analysis, this paper puts forward nine related research hypothesis from three aspects of corporate governance. The research sample is A-share manufacturing listed companies from 2003 to 2012 which is in financial distress situation. According to the research hypotheses, this paper selects related explained variable, explaining variables and control variables. This paper uses Logistic regression model to check the affection of corporate governance variables on the recovery from financial distress. The empirical results of Logistic regression show that equity concentration, the activity of shareholders,the proportion of independent directors, the board of directors’ salary and senior management personnel salary are positively correlated with financial distress. Abnormal change management,the boards of directors’ shareholding stake and senior management personnel shareholding stake have no significant correlation with recovery and the nature of the controlling shareholders has no significant difference between the two contrast sample group, so the nature of the controlling shareholders fails to get into the final Logistic regression model, and the nature of the controlling shareholders may not affect financial distress recovery. At the end, the paper gives the corresponding policy recommendations on the basis of theoretical analysis and empirical research conclusions from five aspects, including: equity concentration, the independent director system and management supervision and incentives.