The Research On The Relationship Between Financial Crisis And Corporate Governance

The financial crisis is a kind of economic phenomenon that enterprises are unable to pay or repay the due debt or the expenses. Corporate govemance has been regarded as one of the key factors contributing to financial crisis. It is one kind of arrangement about the form of corporate organization, control mechanism, supervision mechanism and interest distribution. How to predict and prevent the financial crisis and how to improve the quality of corporate governance have been focused by the scholars all the time.In this paper, it conbined this two study together. Does the corporate governance get in touch with the financial crisis? How does the corporate governance to influence enterprise's financial crisis? We think, the company falls into the financial crisis, because of its unperfect administration structure. With the separation of ownership and operation, a controlling manager would desire to go on expropriating wealth for as long as possible. Then the weak governance leads to agency problems. In order to decrease the cost of agency at the same time increase the company value, it is important to design and arrange the corporate governance efficiently. To an enterprise, it can form stronger corporate governance ability only when it has stronger comprehensive operation ability. And only by possessing good comprehensive operation ability can it improving the profit ability of enterprises constantly. Thus strengthen its comprehensive debt paying ability. At last it avoids the emergence of such malignant incidents such as the financial failing even failure in operation of enterprise, etc.This paper carries on an overall and systematic positive research on the problem and announces the profound reason which causes the financial crisis.Firstly, six respects from company's debt paying ability, profit ability, operation ability, growth ability, structure of the assets, cash flow at first of this text, the paper use the analytic approach of the main composition to try to get a comprehensive score F value that can reflect company's financial crisis state in an all-round way. Then we analyzes financial crisis and corporate govemance from two aspects: the inner mechanism including ownership structure, key people's encouragement and restraint, characteristic of board of directors, information announcing transparency and external mechanism including the environmental index, competition degree of the product market. This paper mainly uses Liner regression method, regard the relationship of the corporate governance variable and financial crisis as the research object, and study each relation of corporate govemance variable and financial crisis. Secondly, this paper has constructed a G index that reflects the corporate governance competence synthetically. Then divide all the samples into five groups according to G index (the deffirent of the corporate governance competence). We have got the conclusions that it has a remarkable different of financial crisis F value between different groups. At last we uses the weighting least square method to research the relationship of G index and financial crisis F value.