A Study On Correlation And Alternative Of Corporate Governance Mechanisms

With the development of modern enterprises, the relationship between corporate governance and its performance has become a major issue in academia.Many researchers in china and abroad have carried out a theoretical analysis and empirical study in order to explore and to seek the issue. Although this study is immense, it is difficult to get a unified conclusion. The different research shows the different correlations. Some research indicates the positive correlation, and some indicates negative correlation, and the rest indicates no relationship. Because of the existence of complex mechanisms relationship, so the study of relationship between a single variable and corporate performance does not come to a unified conclusion.Therefore, based on the analysis of the effect of governance, four different governance mechanisms are picked up to study the correlation between them and the alternative, to explain the reason of different governance mechanism has no significant effect on performance.This paper rooting in the background of corporate governance, meanwhile on the basis of explaining the basic content of corporate governance, discusses the research status of the relationship between corporate governance and performance,which leads to the main content of this study, namely correlation and substitution of corporate governance mechanisms. On the basis of theoretical research, the reasonable four variables are selected including large shareholder governance,independent directors, executive structure, and incentive. Via the method of combining empirical analysis with theoretical analysis, the analysis is carried out to conclude negative correlation the relationship between any two of the four variables.With regard to substitution, this paper explains its definition, thereby by themethod of theoretical analysis, to demonstrate that in the same level of corporate performance, the four variables’ substitution. The innovation of this paper is to put forward the applicable conditions of substitution, which means that the substitution must be discussed upon some certain conditions which change the limitation of the traditional literature with a negative correlation.Based on the research of correlation and substitution, the paper explains the reason why the corporate mechanism and performance is ambiguous, namely the negative relationship weakens the corporate performance. On this basis, in view of the current situation of large shareholders, independent directors, the incentive,furthermore this paper puts forward some reasonable policy recommendations.