Natural Persons Holding Corporate Governance Mechanisms And Their Treatment Effects

The ownership structure of China's listed companies controlled by natural persons is much closer to the West, due to less constrained by government departments, its market features is more evident. Therefore, its corporate governance mechanism and governance effect is inevitably different from the other listed companies. If they were treated with other listed companies equally, it will have adverse consequences both in government policy and academic research on theory. This paper was based on the natural holding of private listed companies in Shanghai and Shenzhen of 2003-2008 years as a sample, as this kind of listed companies did not have many questions such as the examination of State-owned equity, the government influence on incentive for senior manager, as well as the approval for change in State-owned stock, etc. Therefore, this paper did not involve these factors above, and tried to reveal operation of such corporate governance rules mainly through the positive analysis.Corporate governance is a complex system, domestic and international research was merely about a single mechanism, little research combined all the corporate governance mechanisms. Based on the internal and external mechanisms of corporate governance, this paper used positive analysis methods to reveal the relationship between the corporate governance effects and the corporate governance mechanisms. Internal governance mechanism mainly involved three aspects:the mechanisms of shareholder control, decision-making mechanism on board of directors, as well as the senior management incentive mechanism. The external governance mechanism took information disclosure mechanism for example. Through positive analysis we had the following conclusions:(1)The corporate governance mechanisms of China's natural persons holding listed companies was morely reflected in the form, not really practicable, they could not really prompted the insiders to maximize the value of enterprises and to work hard. (2) In the listed companies of natural persons holding, large shareholder controlled the value of the company on one hand, so he or she had a positive impact on the firm value; on the other hand, he had a negative impact on the corporate value due to its occupation of the interests of small shareholders and reducing the stock liquidity. In addition, there was a "range effect" between the largest shareholding ratio and the company value. At the same time, the impact of stock checks and balances on the corporate governance performance was not quite obvious. (3) The larger scale of board of directors, the higher proportion of the largest shareholders, and the large size of company, then the lower board independence. At the same time, the more frequently board meetings, then the higher corporate governance performance. It means that the Independent Directors System had a significantly positive effect on the governance performance of listed companies controlled by natural persons, but this effect existed lagging. (4) The higher proportion of the largeset shareholder in natural holding listed companies, the higher proportion of independent directors, and the chairman and general manager concurrently, then the fewer of the executive changetimes; furthermore, the average of executive pay did not produce significant promoting role on corporate governance effect, but the executive changes had an obvious promoting effect on corporate governance performance, but the effect also lagged. (5) The external governance mechanism of listed companies controlled by natural persons has significant negative effects on corporate governance performance. While CPA firms did not have a tendency to connive the listed companies which had high market value, there was tendency to connive listed companies which had good financial performance. In addition, the higher audit fees of listed companies controlled by natural persons, the larger size of company, the higher independence of the board, the lower of asset-liability ratio, then the more likely the company could obtain "a clean audit opinion".In brief, this paper ultimately proved the relationship between corporate governance mechanisms and governance performance in the listed companies controlled by natural persons through analyzing and evaluating the corporate governance mechanisms and governance performance of the sample companies, and provided a theoretical and empirical basis for its corporate governance.