Empirical Research On Corporate Governance Impact On The Performance In GEM Listed Companies

Since the1980s, as China’s economic reform and opening up and the developmentof financial markets, corporate governance is becoming a new topic in front of people,troubling economics, law experts and scholars. Sound corporate governance is animportant part of modern enterprise system, an effective way for enterprises to improvethe company’s competitiveness and enhance performance. Following the main board andsmall and medium-sized board market, GEM, from the first listed28to the present281,further improves our capital market system, becoming the Chinese version of theNasdaq. With the development of more than one year, GEM has expanded in industryand geographical distribution. GEM gives us the impression of high-risk, high profit andnot outstanding performance but great room for development. However, a series ofproblems plague entrepreneurs and investors. They share the joy and tears of neonatalcapital market.On the basis of the literature on corporate governance and performance, this articlefocuses on emerging GEM. The existing study on performance of corporate governanceis mainly concentrated in the main board market and small and medium-sized board, sothe GEM internal and external control impact study on the performance is of realtheoretical and practical value.To companies listed on GEM2010data for the study sample, corporate governanceis divided into both the internal and external aspects. By means of multiple regressionanalysis on the study of internal and external corporate governance effect on thecompany’s performance, this article identifies the problems in corporate governance ofthe GEM companies and makes recommendations. The article also divides the types ofcorporate governance, by comparing different corporate governance types ofperformance to find the mode of corporate governance at this stage suitable for GEM.Through empirical analysis, we conclude that: the proportion of the largestshareholders, equity balance degree, the unity of chairman and general manager,education of chairman, the top three executives total remuneration, managerialownership ratio,asset-liability ratio, Government’s involvement in corporate governance will have a significant effect on firm performance. Through different modes of corporategovernance, at this stage employees and government participation in corporategovernance, executive and employee participation in corporate governance have asignificant effect on enhancing company performance. Finally, this article analyzesinternal governance variables and external governance variables that not significant,advicing the measures to improve the level of corporate governance. These views include:integrity stopgap, sub-unit root of the problem; guarantee the independence of the boardof directors, focusing on the development of human capital; to establish seniormanagement system of commitment, short-term and long-term incentives to assist insetting; initiative not passive bank governance, to establishment the body of directors andsupervisors; to attract more institutional investors; to eliminate employee concerns, andto maintain the independence of the staff governance; board seats to establish theralationship between governance and suppliers; goernment to guide the managementdirection and strengthen supervision.