Research On Relationship Of Corporate Governance Structure And Corporate Financial Crisis

Since the last mid-90, Many multinational corporations which have prominent positions and excellent achievements from all over the world, such as Enron Corporation,Bank of Bahrain, WorldCom Communications, Lehman Brothers and so on, have bankrupted overnight, which made the world shocked. Because of that, people have been focusing on corporate governance structure, and more and more academicians beginning to study that,from the angle of the early warning model for corporate financial crisis, or from another angle, such as the relationship of the structure of board and corporate financial crisis, looking for the relationship of corporate governance structure and corporate financial crisis, in order to achieve a major breakthrough in theory and apply to the practice for guiding practice.Generally speaking,upstanding corporate governance structure can be beneficial to improve the ability of management and preventing crisis, the other way round, weakened corporate governance structure would not only impact on industrial structure, but also cause many corporations bankrupted or recombined. So we must improve the corporate governance mechanism, which is very significant to reinforce market competition and development and prevent from getting into the corporate financial crisis.We define the corporations specially dealt with as dropping into corporate financial crisis, using the data from the years of 2006,2007,2009,2010 as research samples to analyse the relationship of corporate governance structure and corporate financial crisis and including three portions, such as foundation of arguments, case analysis and empirical analysis.On basis of the principal and agent theory,the internal control theory,the general rules concerning stakeholder theory, first of all, we analysed the relativity between corporate governance structure and corporate financial crisis from 2 aspects, next, analysed the relationship by combining 2 cases, such as mindong electric power and kelong event. Undoubtedly, both of them show unreasonable stock right structure and the structure of board cause them get into corporate financial crisis, and then improving the corporate governance structure is currently the most important aspect, plus reducing the probabilities of getting into corporate financial crisis. Finally, in basis of theoretical analysis and cases analysis, 4 logic regression models were founded by selecting STATE(%), COR(%), CB(%), CR5(%), DDBL(%), DUAL, DIRSIZE as variable indexes. The analysis of regression models result shows the more the STATE(%) and DDBL(%), the worse company's financial status. Otherwise, the companies get more DUAL, which means they are not likely to drop into corporate financial crisis. A negative correlation was found between COR(%), however, a positive correlation between the variables CB(%), CR5(% ) and DIRSIZE.This paper discusses the correlation between corporate governance structure and corporate financial crisis on basis of stock right structure and the structure of board, which is beneficial to extend the category of the modern company system. Meanwhile, it examines the effects from the angle of the positive analysis and puts forward specific improvement measures and policy recommendations about the aspects of stock right structure and the structure of board, for providing effective decisions to build up modern corporate systems and reduce the probabilities of getting into corporate financial crisis.