Empirical Analysis On Business Distres Of Chinese Listed Companies Based On Corporate Governance

There is no doubt that imperfect corporate governance leads to business distress.In1995，because of trader Nick PLC in excess of speculative derivatives trading，Barings bank finally went bankrupt. In2001, Enron hide debts, manipulated profit,finally ended up in bankruptcy. In2007, the northeast high-speed company withperfect equity structure had a lot of contradictions, eventually ended up with break-up.In2008, in the case of consecutive losses, there was the old and new shareholdersbattle for control in Hong Sheng Company, eventually led to the company delisted.These cases are concentrated that corporate governance problems eventually make theenterprise into the point of the line. Therefore, studying the effect of corporategovernance to the management dilemma has important significance.This paper applying agent theory, adopting normative research and empiricalresearch, selecting ST companies in Chinese a-share stock market in2013and2014,matching normal companies according to the size of asset, selects the corporategovernance indexes of ownership structure, board characteristics and the managementincentive. The empirical results show that: first, within a certain limit, the equitybalance degree is positively related to the business distress; second, in the nature ofthe controlling shareholder, the ownership of state-owned shares is positively relatedto the business distress; third, chairman and general manager with a person ispositively related to the business distress; forth, the three former executives of theaverage salary is negatively related to the business distress; finally, other explanatoryvariables such as the proportion of the first shareholder, board size, proportion ofindependent directors, board meeting frequency and the average share ofexecutives,the statistics study of them are not significant with the business distress.According to the empirical research conclusion, I believe that: It is theimportant means of perfecting the corporate governance structure to realize thesustainable development of enterprises. First of all, the enterprise should form areasonable equity balance degree, gradually reduce its state-owned shares, try to make chairman and general manager separate and moderate increase executive pay; Thesecond, outside the third party and regulators should improve the external corporategovernance evaluation system, on the basis of external corporate governanceevaluation system, building a reasonable corporate governance structure; Finallycountries should further improve the legal system, making the enterprise to grow in afair and orderly market environment. So enterprises can improve their various aspectscompeting ability, eventually avoid into a business distress, at the same time it canform the healthy and orderly development of capital market in China.