The Research On The Effect Of The Board Of The Directors To Corporate Performance In Product Markets Competition

Since the 20th century 90s, under the direct impact of economic globalization, the internal of the company governance is experiencing by "centrism on the general meeting of shareholders" to "Board-centrism". Along with the deepening of Chinese joint-stock reform, there is growing awareness to the board as the core of the important role of corporate governance, it can improve the efficiency of the corporate governance. We must face this problem that how to improve the board governance and improving the efficiency of the board governance. The key is to control the board through a series of internal and external mechanisms to implement corporate governance, to ensure scientific decision-making, monitoring the effectiveness of the company, so as to ensure the interests of all stakeholders. Therefore, how to strengthen the market supervision mechanisms, especially in the product market competition, how to strengthen the board of directors governance is must be taken into account in the next phase.This paper first analyzes the difference of the board governance in the different degree of competition in product markets. Then based on the sample of 3003 Chinese listed companies of the year 2005 to 2007, it concerns 17 industries. Through the establishment of the board characteristics on corporate performance of the regression model, we have analyzed the relationship between six characteristic of the board and corporate performance in the different degree of product markets competition. Finally, we proposed the policy how to promote the board in product market competition based on the empirical conclusions from the macro level, meso and micro level.The result tells us that the board of the directors functions differently in different product markets competition. In the lower product markets competition, company does not have too much pressure on the operation so that the board of the directors have little enthusiasm and motivation to improve the company management. But in the stronger product markets competition, the difference in the operating results will be enlarged quickly. Those with low levels of management and decision-making companies will face a loss or even bankruptcy so that the board of the directors needs to play its supervisory role. Judging from Chinese actual situation, only when the product markets competition has been improved, strengthen the supervisory role of the board of directors to improving corporate governance, so that have more positive impact on corporate performance.