| The separation of ownership and management is the root cause of corporate governance problems.Since the researches have shown a link between well-founded corporate governance structure and better firm performance,corporate governance has taken on a new significance.The main objective behind the concept of corporate governance is to establish a controlling and monitoring mechanism that protects the shareholder’s wealth.It is argued that an effective controlling mechanism can be achieved by a concentrated ownership structure and an effective board of directors.However,the inconclusive evidence provokes this study to investigate the phenomenon in the context of an emerging economy like China.Although the relationship between board characteristics and firm performance is inconclusive,the previous literature focusing mainly on the Anglo-American perspective inspires this study to investigate in the context of China.China is the rapidly growing economy in the world and keen to capitalize on the benefits of the efficient governance structure.Therefore,this study analyzes the role of ownership structure and board characteristics of Chinese listed firm performance.Although the findings in earlier researches have shown the importance of corporate governance in firm performance,some reservations are expressed about the methods used to measure firm performance.Previous researches in the area of corporate governance and performance are more focused to correlate profitability performance with governance.The profitability measures are weak methods because profitability depends on extraneous,and,at times,unrelated factors such as market growth,demand,taxes,and exchange rate.The recent trends to measure firm performance with efficiency ratios have received attention due to their realistic approach.However,empirical evidence to prove a significant relationship between corporate governance and firm efficiency is lacking.Therefore,we correlate the efficiency with ownership structure and board characteristics as a proxy of corporate governance,which has been ignored in corporate governance literature.The business of companies is a complex mechanism that interacts with various determinants,and many factors may work on firm performance.The capability and effectiveness of the board of directors of corporate organizations are significant among these factors.Despite this fact,inadequate evidence has been presented in prior researches,which provokes the idea to investigate the phenomenon in a different socio-economic context.Hence,it is important to investigate the role of ownership structure and board characteristics in different business settings.This examination is centered around the characteristics of the board of directors and it will learn past experimental investigations and analyze the relationship between board structure and firm efficiency.We explore the phenomenon in a new and relatively rapidly growing business setting,which was ignored in previous research.This study documents the role of corporate governance of listed internet companies on efficiency that was ignored in the previous literature.This study is important because it considers the potential of internet companies.Since the internet companies have witnessed unprecedented growth in the recent decade,it is significant to study the seriousness of internet companies towards the protection of shareholder’s wealth by adopting an effective controlling mechanism.This investigation has applied data envelopment analysis to measure the efficiency of Chinese internet companies.The econometric analysis is further followed by the Poisson estimation approach to regress the board and ownership variables against efficiency values.We further applied FsQCA(Fuzzyset Qualitative Comparative Analysis)to verify regression results by increasing the robustness of our study.We found that internet companies are serious to capitalize on the benefits of good corporate governance practices.The ownership structure and board characteristics are found significantly associated with the efficiency of internet companies.The specific results of our study also provide useful insights.For instance,a positive relationship of CEO duality with firm efficiency revealed that the governance dynamics are not the same in every context and depend on contextual factors.In addition to this,we have found an inverse relationship of ownership concentration with efficiency when board size is large.This contended that when ownership is not highly concentrated the large board is required to control the management.Further,we extend our model by investigating the ownership and board characteristics relationship with efficiency in Chinese non-internet listed companies.The reason to investigate the proposed model in non-internet companies was to check the generalizability of the model in a different work setting and to document the role of firm characteristics on the governanceefficiency framework.We further investigate the impact of ownership structure and board characteristics on the efficiency of state-owned and non-state-owned listed companies.The state-owned firms are the unique characteristic of the Chinese economy and consists of a large part of the Chinese economy.Moreover,the role of specific ownership is also the point of focus while investigating the ownership and board characteristics nexus with efficiency.The efficiency of SOEs and non-SOEs were estimated using DEA where both groups are estimated in a single sample due to the comparative nature of the DEA estimation approach.The role of ownership and board variables were estimated using dynamic system GMM estimation.Moreover,we applied sensitivity analysis to provide more robust results and consistency of our results with different techniques.It is noted that the efficiency of both SOEs and non-SOEs is significantly associated with firm efficiency.However,ownership concentration has been found positively associated with the efficiency of non-SOEs while negatively associated with SOEs.This corresponds to the notion that high ownership concentration in SOEs has deteriorating effects on firm efficiency.It is also observed that firm age is negatively associated with the efficiency in SOEs which can be understood as the SOEs are suffering from inertia due to bureaucratic ossification.Finally,the comparison of the internet and non-internet listed companies of China by estimating the effect of ownership structure and board characteristics on firm efficiency has been documented.We estimated a more complicated model to test the phenomenon by employing the differential equation using a system-GMM estimator that allows us to combine equations in differences of the variables with equations.This permits us to measure whether the impact of ownership concentration and board characteristics on non-internet firms is statistically different from that of internet firms.Finally,for robustness check,we evaluate the full effect of board and ownership variables on firm efficiency of internet and non-internet firms following Mohanty and Codell’s proposition to calculate the total derivative of efficiency.The overall results explain that both the internet and non-internet companies are serious to adopt good governance practices to enhance firm efficiency.Some contradictory results explained the importance of contextual and firm characteristics that affect the choice of governance mechanism.This study contributes to the existing body of knowledge by providing a strategic framework for exploring the governance-efficiency relation by providing empirical evidence.In addition,this study uses multiple methodological approaches to provide useful insights into corporate governance and efficiency.The finding provides strong evidence that ownership structure and board characteristics significantly affect the efficiency of Chinese listed firms.Therefore,managers and policymakers should pay attention to make strategies and develop a strong code of corporate governance to gain maximum benefits. |
