Free Cash Flow,Corporate Governance And Corporate Performance

Huge free cash flow retention is a common problem in liquor enterprise, take Wuliangye and Maotai for example, there are billions yuan just take as saving, or invest to the project which NPV is less than zero by manager, or wasted in the consumption in employee ever year, which supposed to be dividend to the shareholders. Political reasons, lack of experience, pursue of their own interests are intimately connected to this phenomenon, as a result, over-investment, suboptimal decisions, reduce of market value, damage to the shareholders occurred frequently. Based on this, first of all, this paper reviews the domestic and international literature of free cash flow and corporate governance, free cash flow and corporate performance, corporate governance and corporate performance, and secondly, makes analysis to free cash flow theory, corporate governance, and agency cost theory, thirdly, research the relationship between free cash flow and corporate governance from corporate governance index such as ownership concentration, size of the board and the supervisors board, proportion of independent directors, the proportion of executive pay, chairman and general manager of two ministry which take 13 listed companies in the liquor industry as the research object; research the relationship between free cash flow and corporate performance. The results showed that:for the listed liquor enterprise, significant positive correlation with size of the board but does not have significant relationship with ownership concentration, however, the size of supervisory board and proportion of independent directors are significant negative correlative to the per share free cash flow which indicating that the supervisors and independent directors of listed companies has played an active role on the constraint of free cash flow; the proportion of executives, divide of chairman and general manager do not show any significant correlation with free cash flow; free cash flow has positive correlation with corporate performance.Finally, based on the results of theoretical and empirical analysis of listed companies in the liquor business in our country, put forward relevant policy recommendations in macro and corporate governance level which provides more data and empirical support to the study of corporate governance.