Study Of Governmental Intervention,Top Management Team And Corporations' Performance

Corporation governance consisted of external governance and internal governance. Internal governance aimed to tackle two types of principle-agent problems---problem between strong stock holders and minority stockholders, problem between senior executives and stockholders. External governance mainly studied how exterior factors---political factors, social factors, historical factors, etc---affect enterprises' performance. Based on external governance, the paper studied governmental intervention's influence on corporations' performance with internal governance.Structural reform of the supply side, put forward by China, required the government to streamline administration and delegate power to the lower levels so that the market could be activated. To achieve the goal, China should identify the relationship between governments and corporations, which was the standing focus for economics and management. On one hand, for a vast number of purposes, governments were able to affect enterprises' operation and its performance by fiscal expenditure, subsidy and taxation, etc. On the other hand, companies could not survive and develop without support from governments' policies. To study relationship between governmental intervention and companies' performance, the paper used top management team's governmental experience as intermediate variable to study how governments influenced enterprises' performance through top management team.The paper used China listed private enterprises' data, during period from 2008 to 2013, and multiple hierarchical regressions to analyze governmental intervention's influence on corporations' performance. Moreover, the paper drew top management team's governmental experience into the model. Based on the study, the essay found that there was a negative correlation between governmental intervention and companies' performance. Top management team's governmental experience could significantly weaken the negative correlation. After the conclusion, the paper put forward suggestions to governments and corporations.