| As the agent of an enterprise, CEO (Chief Executive Officer) plays a very important role in the running and development of an enterprise. Since China’s reforming and opening up policy, the CEO-changing issues caused a widely attention from all walks of life. Principal-agent theory based on the company’s performance considerations, the change is an important mechanism of the company’s internal governance. Recently, managers of listed companies in our country changes often, causing strong reaction of the capital market, it is also attracted the eyesight of our society. Management theory argues that CEO’s power can be used sharply for their background of political power, which can bring a number of ways to reduce the financing constraints like receiving government subsidies and tax breaks and other benefits and so on. These affects also will affect CEO’s position. This article is based on the principal-agent theory, human capital theory and rent-seeking theory framework, using the combination of normative and empirical research method, by investigating the political background of CEOs of listed companies on its change-performance sensitivity to test the effectiveness of the internal governance mechanism of listed companies in China.This article is been divided into five parts. The first part is the introduction, this paper mainly introduces the background of this article and significance and research targets and methods, innovation and characteristic, the influence factors of CEO’s change at home and abroad are reviewed and CEO political background literature. The second part is the theoretical foundation and concept definition, this part defines the relevant concepts of a category in this paper, our study is based on the principal-agent theory, human capital theory, and higher order theory and so on. Theoretical foundation is expounded. The third part is the theoretical analysis and hypothesis, this part firstly introduce the current situation of the CEO’s change that existing in the listed company of our country. And also the background in this study, especially the political background, finally analyzes the changing of CEO by its political background-performance sensitivity mechanism and put forward in this paper, on the basis of the hypothesis. The fourth part is the empirical research, selecting our country’s 2008-2014 data of listed companies as samples, using Wu Chengsong (2015) and Fisman (2009) model and research, and on the basis of considering the previous studies on the influence factor of CEO’s changes, design a model to measure the political background of the CEO has influence on its change-performance sensitivity. The fifth part as the research conclusions and policy Suggestions, the study found that:(1) defining the other conditions, CEO’s political background has significantly influence on their sensitivity of changing-performance, which is a negative correlation.it claims the CEO who has political background can inhibit performance decline in business is its removal or alteration probability; (2) defines other conditions, compared with private enterprises, this effect is more significant. It maybe that the political background in this running of private listed companies is not obvious. This is because the CEO of state-owned enterprises would enjoy lots of advantages of greater freedom and respect, and their rights be enlarged meanwhile, and state-owned enterprises’ CEO may be take care of his political background, making themselves better against censure. And this problem of private enterprises in the performance is not obvious. This study Based on the political background of the factors in our internal corporate governance can provide some references for China’s capital market, especially to the further reforming of our state-owned enterprises. It will also help to further influence our capital-market. |
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