Executive Directors And Controling Shareholders' Governance

Under the governance structure of shareholders-board-managers,the controlling shareholders tend not to direct manage enterprise,and send the right to a more professional managers.When shareholder rights are given to the enterprise managers,whether the goal of making full use of the professional managers' ability achieves depends on whether managers manage the company is conducive to long-term development.The shareholders and managers both are pursuers of utility maximization,so managers will not always be in accordance with shareholders.Therefore,shareholders must strengthen the supervision of managers.As the"external stakeholders" of the company,how to supervise managers become more difficult problems.Due to the asymmetric information between the board of directors and managers,appointing directors as a non-executive director is very difficult to achieve the goal of controlling shareholder to strengthen supervision over managers.Therefore,if the controlling shareholders want to achieve the purpose of strengthening supervision,they should appoint directors as internal directors(which is called full-time directors in this article)to achieve the goal.Controlling shareholders' motivation to supervise managers being enhanced has become the consensus of academic after China's split share structure reform.As a result,the research based on the exogenous events can solve the problem of endogenous.Therefore,combined with the institutional background of China's split share structure reform,based on the principal-agent theory and the theory of corporate governance,with China's split share structure reform as a external shock,using data of listed companies from 2004 to 2007,using the methods of Difference-in-Difference,Heckman,and fixed effects model,this paper tests the relationship between controlling shareholders' motivation of supervision and full-time directors and the relationship between full-time directors and controlling shareholders' motivation.The paper finda that the increasing of the controlling shareholders' motivation of supervision increases the ratio of full-time director after China's split share structure reform and the increasing of the full-time directors increases the company's performance,reduces the real earnings management level and increases the managers pay-performance sensitivity.On the basis of existing research,this paper further discusses the full-time directors' governance effect and provides targeted policies and suggestions to corporate governance by analyzing the research conclusion.This paper is divided into the following six parts:The first part is the introduction.Firstly,this part introduces the research background of this paper,and then it explains the purpose and significance of this study.Next,the paper put forward the research ideas and frameworks.Finally,this part introduces the research method and the structure.The second part is literature review.Firstly,this part reviews the controlling shareholder governance research.Then this part reviews the relationship between China's split share structure reform and controlling shareholders'behavior.Next,this part reviews the effect of boards' supervision.Finally,this part summarizes the research results of native and abroad.The third part is the system background,theoretical analysis and hypothesis.Firstly,this part explains the background of China's split share structure reform.Next,this part expounds the important basic theories related to this article,including agent theory,corporate governance theory,etc.Finally,this part proposes the hypothesis by analyzing the relationship between the controlling shareholder supervision and the full-time directors on the basis of these theories.The fourth part is the research design.Firstly,this part illustrates the data sources and sample selection in this paper.Next,this part explains the meaning and measure of the variables,and then builds the empirical model in this paper.The fifth part is the empirical result.Firstly,this part statistics the industry and basic descriptive variables.Next,this part carries on the empirical research by Difference-in-Difference,Heckman and fixed effects regression method using the data of listed companies in 2004-2007,including correlation analysis,univariate and multivariate regression analysis.The sixth part is the conclusion and policy recommendations.Firstly,this part analyzes the empirical analysis results,and then puts forward countermeasure and the suggestion about how to consummates the system of listed company governance based on the proposed.Next,this part puts forward the research and further prospects.In this paper,the main contributions of the paper are the following three points:(1)this paper solves the endogenous of the large shareholder governance in a certain extent through China's split share structure reform.(2)this paper enriches the study of full-time directors controlling shareholders appointed increasing controlling shareholders' supervision and the study of the relationship between the controlling shareholder governance and economic consequences.(3)this paper study the influence of controlling shareholders on corporate governance by the particular perspective of full-time directors,which provides evidence for us to discriminate the different types of internal directors.This study can guide us how to deal with the dual of board of directors and managers in the corporate governance practice.At the same time,the paper provides a new way on how to strengthen the supervision of managers for controlling shareholders.This paper also provides a reference for the formulation and revision of the relevant laws and regulations.