Research On The Relation Between Corporate Finance And Performance Under The Financial Crisis

The financial crisis in2007highlights the problems in the U.S. corporate governance, such as excessive fragmentation of ownership, inadequate supervision of the board of directors, which causes the reflection on corporate governance of investors and regulators. Sound governance mechanism is an important guarantee for improving corporate performance, while ownership structure is the property basis of corporate governance issues. The ownership structure determines the relationship between shareholders, board of directors, supervisory board and management thus affects the company’s operating decisions, the behavior of shareholders, and management incentives, which ultimately impact the company’s operation performance. As most of Chinese listed companies came from state-owned enterprises, whose ownership structure is obviously different from other countries and the development of capital market is also quite different therefore we can’t simply copy or draw on the experience of other countries.This paper builds a framework of analyzing the relation between corporate governance and performance based on ownership structure, combined with the governance status of Chinese listed companies and we build a model to empirically analyze this relation. The paper chooses1392listed companies in Chinese A-share market and picks their data from2005to2010. Then we constructed a multiple regression model and the empirical results show that the companies controlled by non-state shareholders have significantly better performance than those controlled by state-owned shareholders, and the financial crisis has expanded the difference. The performance of companies controlled by state-owned corporation is better than those controlled by national institutions. Equity liquidity significantly improves company performance. Ownership concentration and equity balance also play an important role in improving performance. Ownership of the board of directors has no clear relation with performance while managerial ownership has certain positive impact on performance. Based on the empirical analysis, the paper puts forward policy recommendations in the fields of improving ownership structure, governance mechanisms and the capital market.