A Study On The Relation Chain Between Corporation Governance And Enterprise Performance

In modern enterprises, due to the separation between their ownership and administrative power, the owners are usually not the direct decision makers for the enterprises’ operation and management. On the other hand, because of asymmetricinformation and procuration, the delegated management personnel tend to bring about adverseselection and moral hazard and in investment decision making they usually make inefficient investment decision for personal interest, which injures the interest of the enterprise and its owner. However, the construction of governance mechanism in modern enterprises could bring supervision and encouragement effect to the management personnel, bridge the asymmetricinformation and conflicting interest between the enterprise owner and its management personnel, help the latter make reasonable investment decision and thus improve the performance of the enterprise. In the mean time, the construction of governance mechanism will produce reasonable use for laid up capital created during the enterprise’s financing and operation activities, invest this part of capital to the enlargement of the enterprise scale or some profitable investments, which is the best use of the laid up capital and beneficial to the total performance of the enterprise.This thesis incorporates enterprise governance, enterprise performance and enterprise investment into a unified theoretical frame for study and discusses the practicability of enterprise governance’s supervision and encouragement influence on the decision making and investment of the management staff of the enterprise which leads to the improvement of the investment efficiency and total performance in enterprises.This thesis focuses on the relation chain of “governance mechanism, investment behavior and economical consequence”, chooses the sampled data of two manufacturinglistedcompanies in Shanghai and Shenzhen from 2012 to 2014 and builds its mediating effect model. Through its study, this thesis comes to an conclusion that enterprise governance’s supervision and encouragement is capable to influence the decision making and investment of the management staff of the enterprise, i.e. the investment efficiency can bring about mediating effect to corporation governance’s promotion impact on enterprise performance.This thesis enriches the theoretical relation between governance mechanism, investment behavior and economical consequence and elaborates the function mechanism between these three elements, which has some enlightenment for the enforcement of corporation governance and the normalization of decision making and investment behavior in listed enterprises.