Study On The Effects Of Financial Governance Costs Upon The Company’s Performance

Since the reform and opening up, with the rapid development of the economy and increasing competition in the market, enterprises in the complex and changeable environment are both opportunities and challenges, So how to improve the business performance of enterprises, decrease the cost of enterprise financial management has become the focus of academic and theoretical. The relationships between financial governance costs and operating performance, both in theory and in practice meaning significance, is a very important project. The current domestic and foreign scholars study mainly focused on the business performance in a particular part of the financial governance cost included(such as agency cost and transaction cost, etc.) to its influence, but few scholars can systematically and thoroughly study the impact on the overall cost of financial governance on operating performance. So in this paper, in the perspective of financial governance cost, on the basis of the agency cost theory and transaction cost theory, the agency cost, transaction cost and the cost of financial system were generated the influence on business performance, respectively.This paper, on the basis of research results at home and abroad for reference, based on the principal-agent theory and transaction cost theory,combined with the development of china’s capital market and the constraints within the external conditions in recent years, puts forward the research hypothesis for the economic development of our country, in the Shanghai and Shenzhen A shares listed companies in China 2011—2013 data as research samples, dependent variable is corporate performance,selects return on net assets, return on total assets, sales net interest rate, quick ratio, etc. 11 indexes as initial variable to reflect the company’s operating performance, constructing scientific and reasonable performance evaluation system, then uses principal component analysis method to get comprehensive operating performance, independent variable is financial governance cost, Including the agent cost, transaction cost and the financial system, control variables are company size, Tobin,s, industry variable, empirical study of the impact of the financial governance costs on operating performance. This paper builds the model can largely explain financial governance cost impact on business performance, and can get the conclusion of conform to the actual situation in our country.Concretely speaking, this paper draws the following conclusion:First, the relationship between agency cost and the company’s performance, operating expense ratio can reduce the value of the enterprise, the higher operating expense ratio, the lower business performance. Financing costs and operating performance was negatively correlated, managerial ownership ratio and corporate performance show U-shaped rather than linear relationship, “entrenchment effect” can explain this phenomenon.Second, transaction costs and operating performance was negatively correlated, the greater the transaction costs, the lower the company’s operating performance.Third, the relationship between the financial system cost and operating performance, monetary compensation to a certain extent, can arouse the enthusiasm of management, the corresponding enterprise operating performance can be improved; Management scale is larger, the more cost, and not easy to reach a consensus, cost is high, the decline in operating performance; audit fees are negatively related with business performance.Based on this, the paper finally puts forward some policy recommendations to solving related problems: improving the assessment mechanism, reforming the salary system; improving the corporate governance mechanism to ensure administration rationality; optimizing the debt structure, establishing an effective constraint mechanism; deepening reform of the market economy system to reduce transaction costs.