Empirical Research On The Board Faultlines, Effort Level And Firm Performance

Private enterprises are the carriers of employment and technological innovation,while Zhejiang province has always been the most developed and most market-oriented province in China.For more than 30 years,the economy of private enterprises in Zhejiang has grown up from small to large and promoted Zhejiang’s economy to lead the country.With the development of The Times,the emergence of new industries,new formats and new business models have brought pressure and challenges to the development of private enterprises.The transformation and upgrading is an urgent problem for private enterprises.As the core governance mechanism and decision-making body of the company,the board of directors has a decisive role in the development and reform of the company.If the private enterprise is to change from the perspective of the board of directors,it is also a way to accelerate the transformation and upgrading.Functions of heterogeneity between members of the board of directors,such as background,the different degree of education,will make for more diverse information and the necessary resources.Based on the information and resource integration,is advantageous to the company to make transformational decisions and get competitive advantage,eventually improving the performance of the company.While the diversity of board members brings many conveniences,it also tends to have negative effects.Along with the increase in attribute characteristics between members,there will produce contradictions and differences,or because of the different attributes,internal team will produce small groups.It will accelerate discord and division,we can call it faultline of the board of directors which will study in this paper.Because of the internal nature of the faultline of China’s board of directors,it is a meaningful topic to study the faultline of the board.At present,there is not a lot of literature on how the board’s fault will ultimately affect corporate performance.In this paper,on the basis of existing research,starting from the actual background of our country,there will take the research of the relationship between Zhejiang private listed company board faultline and the corporate performance.And the paper introduces the board effort as a intervening variable,breaking the previous "input-output" research model and also introduces the shareholding ratio of board and duality as a moderator variable.Based on the principal-agent theory,social identity theory and the theory of the high echelon team,this paper makes an empirical analysis of 792 sample enterprises of private listed companies in Zhejiang province from 2013 to 2016.First of all,according to the board of directors faultline formula,the article selects the board function background,politics,education background,tenure,member type which reflecting board faultline indicators and uses R language to compute the strength of FAU;this article selects indexes from the profitability,solvency,growth ability,operation ability so that the report takes principal component analysis.And the article will calculate comprehensive index which reflects the performance of the enterprise.Then the article makes a descriptive statistics,correlation analysis and multiple linear analysis,inspection and regulation effect of mediation effect.Finally,according to the research conclusion and the relevant actual situation,the management suggestion is put forward and the future research direction is prospected.In particular,the conclusions of this paper are as follows:(1)The strength of the faultline of the board of directors is significantly negatively correlated with the enterprise performance.According to social identity theory,members of the board of directors based on different attributes,will be divided into different groups,which results in lower board internal cohesion and obstructs the board of directors for strategic decision resources integration,and adverses impact on enterprise performance(2)The degree of effort for the board of directors in the board of directors plays a mediating role between board faultlines and enterprise performance.The existence of the faultline of the board of directors creates conflicts,reducing employees’ work enthusiasm.Thi-s may lead to insufficient time and energy to participate in the management and decision-making of the company,which will ultimately lead to a lower performance of the company.(3)The shareholding ratio of the board of directors plays a negative regulatory role on the relationship between the faultline of the board and the performance of the enterprise.This paper concludes that increasing the shareholding ratio of the board of directors will promote the implementation of board decision-making functions,which will improve the performance of enterprises and weaken the negative impact of the failure of the board on enterprise performance.(4)The role of duality is opposite to that of the regulation of the relationship between the faultline of the board and the performance of the enterprise.It may reduce the power interest disputes caused by the separation of the two jobs and make low efficiency ofthe operation of the company,which is extremely beneficial to the company’s continuous and stable development.This study believes that in the future corporate governance,the enterprise should:(1)Improve the selection mechanism of board members.(2)Make more strict rules on the rights and obligations of the members of the board through the articles of association.(3)Establish and improve the rotation system.(4)Take full advantage of the incentive role of board holding in corporate governance.(5)Take full advantage of the positive impact of the integration of the two jobs.