Research On The Effect Of Governance Mechanism And Agency Cost On Firm Performance

Corporate governance is the foundation of company management and development.The level of governance efficiency directly affects the company's profitability.The characteristics of modern corporate governance are that the owner entrusts professional managers as managers to manage the company,and the ownership and management rights are separated.Operators participate in business activities and control the company's costs,and are in an information-dominant position.They are concerned about whether their efforts are rewarded accordingly.The owners do not participate in business activities and are in a position of information weakness.They care about the business operations.result.Due to information asymmetry and inconsistent interests,operators may use their information advantages to harm their interests at the expense of their own extra benefits,causing agent conflicts to generate agency costs,how to reduce agency costs become the core of modern corporate governance.The key to reduce agency costs is to make the interests of owners and operators consistent.In order to achieve this goal,modern corporate governance supervises and motivates operators by adopting various measures or designing various systems,so that operators can use their information advantages to maintain the interest of shareholders in the actual operation and management of the enterprise,thereby minimizing the possibility of both.The conflict between agents,and these measures and institutions constitute the company's governance mechanism.Therefore,by constructing a sound corporate governance mechanism,the agency cost can be minimized,and then the company's performance can be improved.Therefore,the research content of this thesis is how the governance mechanism has an impact on business performance.Does agency cost have an intermediary conduction role in the governance mechanism's impact on business performance? Does governance mechanism can improve performance by inhibiting agency costs? First of all,it defines the concept of corporate governance,governance mechanism and agency cost.This paper believes that the design of corporate governance mechanism mainly focuses on how to motivate and constrain the managers.Therefore,the governance mechanism is divided into the supervision mechanism of the board of directors and executives.Incentives.The supervisory mechanism is measured by the leadership structure(separation of two positions)and the scale of the board of directors;the executive incentive mechanism is mainly reflected in the monetary compensation incentive and the equity incentive.The natural logarithm of the top three currency executives of senior executives is used as a measure of monetary compensation incentives,and the percentage of shares held by senior executives is used as a measure of equity incentives.Agency costs are measured as the ratio of administrative expenses to operating revenue,and corporate performance is expressed as total asset returns.Based on the theories of principal-agent theory,optimal contract theory and executive incentive theory,the hypothesis of the relationship among governance mechanism,agency cost and performance is assumed.In order to verify the hypotheses,the 2010-2016 data of agricultural listed companies,which have an important position in China's national economy,were selected as research samples.Descriptive statistics and correlation analysis were conducted by constructing an intermediary effect model of “governance mechanism-agency cost-corporate performance”.Multicollinearity analysis and the use of hausman regression analysis,and finally to ensure the robustness of the empirical results of the robustness test.The study found that the scale of the board of directors is positively correlated with corporate performance at a level of 1%,and the proportion of senior management holdings is positively correlated with corporate performance at a level of 10%.Separation of two positions is negatively related to agency costs at a level of 1%,and the proportion of senior management holdings is significantly negatively related to agency costs at a level of 10%.There is a significant positive correlation between executive compensation and agency costs at 1% level.In addition,it is also found that the agency cost has a full mediating effect between the company's senior management shareholdings and corporate performance,indicating that companies can improve corporate performance by implementing executive equity incentive measures to reduce agency costs.This study provides constructive significance for the construction of the governance mechanism of listed agricultural companies in China,the effective reduction of agency costs and the improvement of performance.