Study On The Institutional Environment, Nature Of Equity And Top Management Turnover

Under the modern enterprise system, the corporate governance mechanism is the key factor in determining the enterprise's performance, and scientific recruitment and selection is the premise to form the best governance structure, by linking the recruitment and selection of the company's executives to enterprise's performance, to some extent, the good contract design may restrain the manager to idle. However, the internal governance mechanism often needs to match with the external governance environment.Based on this, from the New Institutional Economics theory and the Corporate Governance Theory points of view, taking the transaction cost analysis as the theoretical basis, and linking the economic environment to the China's transformation, this article analyzes the external institutional environment's impact on the corporate governance by using a empirical method combined with theoretical analysis, taking listed companies from 2001 to 2006 in Shanghai City and Shenzhen City as objects of study.The empirical study result has found that the operating performance exerts great influence on the position alteration of the company's executives in our country, there is a significant negative correlation between the operating performance and the position change of the company's executives.However, the negative correlation between the performance and the position alteration of the executives will be added the environment restriction from external system simultaneously, In those regions in which the external institutional environment is much worse, the shareholders are at a natural disadvantage of information, and can not supervise the executives or evaluate their performance more effectively, so, it is much difficult to evaluate the performance through the market activities, there is a weaker correlation between the performance and the position alteration of the executives.In addition, the article has also analyzed in more details the different effects on the corporate governance for the different institutional environment in the different enterprises in which the property of the stock rights is different. Compared with other enterprises, state-owned shares set more social objectives for the executives, there is a complex relation between principal and agent in the state-owned enterprises, the objective utility function for the government should be to maximize the social benefit, including not only economic resorts, but also the political resorts.therefore, the social objectives undertaken by the state-owned enterprises and the intervention has weaken or even eliminated the relationship between the performance and the executive's position alteration to a certain extent. On the contrary, in the non-state-owned listed companies, the positive impact on the corporate governance imposed by the external environment will be significantly higher than it does in the state-owned listed companies.The theoretical contribution of this paper is to provide the empirical evidence of the impact on the corporate governance imposed by the institutional environment among different areas of a country, and then is to analyze the basic characteristics of the corporate governance under the transitional features in our economy, furthermore is to recognize in more details the different effects on the internal corporate governance for the different external governance in the different enterprises in which the property of the stock rights is also different. Looking from the findings of this article, the reform relying solely on the internal governance mechanism can hardly achieve the ultimate goal, creating a market economy environment for the enterprise's independent development and self-operation as soon as possible, perfecting the external legal environment in order to raise the growth level of the market orientation and the competition degree, and realizing effective self-protection for Shareholder's interests is the important issues at present. On the one hand, we must continue to strengthen the laws and regulations to ensure that the interests of the shareholders shall be inviolable, on the other hand, we must further tight up the system construction, reverse the huge difference in the governance environment in different regions. In addition, the article also found that in the process of deepening the reform of state-owned enterprises, we should establish and perfect the modern enterprise system which is characterized by the "Clearly defining property rights, specifying rights and responsibilities, separating ownership from daily management and adopting scientific management", and change the conditions that the state-owned enterprises have a diverse of operating targets, and then raise the level of internal governance by improving the external institutional environment.