A Study Of The Board Governance And Corporate Performance Under The Ultimate Shareholders Control

As an important part of corporate governance, board governance has been a hot topic in the management operation of the enterprise and management practice theory. The scholars committed to theoretical and empirical research on the state of governance of the Board, and to improve the board governance efficiency and the suggestions about the operating performance of the company. On the other hand, in recent years, the study about the ultimate controlling shareholder also began to enter the field of theoretical research. The scholars seek combing the patterns of behavior about ultimate controlling shareholder and its impact on the company’s performance, thereby they want to explore more effective corporate governance programs. For listed companies, the research about board governance and the behaviors of ultimate controlling shareholder, not only at the micro-level helps to improve the level of corporate governance and business performance of listed companies, but also helps to improve the protection to small investors at the macro-level, and to promote the healthy development of the capital market. Therefore, the paper combines the characteristics of the Board governance in A-share market and the characteristics of the ultimate controlling shareholder to concentrate on the study about the relationship of the Board governance and company performance under the control of the ultimate shareholder, in order to provide the theory reference which has the empirical support for proper understanding and evaluation the company governance situation of the listed company in A-share market.Specifically, this paper selects four variables which could describe the relevant characteristics of the ultimate controlling shareholder, such as the cash flow rights of the ultimate controlling shareholder, the ultimate control over, the degree of deviation from the two rights, and the nature of property rights, as well selects six variables which could describe the board governance features, such as the board size, the proportion of the independent directors, the number of the board meetings, the total remuneration of the directors of the top three, the two hats-one of the board chairman and general manager, and changes or not about the chairman of the board, based on making the theoretical analysis, selects2262sample data which comes754A-share listed companies in2009-2011to make an empirical study through descriptive statistics, non-parametric statistical tests and multiple regression analysis, and get the following conclusions:1. Among the characteristic variables of the ultimate controlling shareholder, the proportion of cash flow rights, the proportion of the ultimate control, and the degree of deviation from the two rights respectively exists significant positive correlation with corporate performance. Therefore, improving the proportion of cash flow rights and control over ratio of the ultimate shareholders is likely to improve the level of corporate performance, and the addition of the degree of deviation from the two rights can also be likely to improve the company’s performance. For the nature of property rights of the ultimate controlling shareholder, whether the state-owned holding company or not and its performance was significantly negative correlation, therefore, non-state-owned holding can help to improve the level of corporate performance.2. Among the characteristics variables of board governance, the size of the board was significantly negatively correlated with corporate performance, the significant relationship between the two hats-one of the board chairman and general manager with company performance has not been verified, the relationship between the proportion of independent directors and the company’s performance is significantly negative correlation, the relationship between the number of the total remuneration of the top three directors and company performance was a significant positive correlation, the relationship between the number of the board meetings and corporate performance was a significant negative correlation, but it was relevant to the selection of the performance variables, changing chairman of the board or not significantly negative affected to the company’s performance, but it was also related to the choice of performance variables.3. From the interact regression between the degree of deviation from the ultimate control over and the cash flow rights and the board governance variables, it can be found that the degree of deviation from the ultimate controlling shareholder significantly strengthened or weakened the effect between the board governance and firm performance. The specific results were as follows:the degree of deviation from two right would enhance the negative effect of the proportion of independent directors on the company’s performance, would weaken the negative effect of the number of the board meetings on the company performance, would enhance the negative effect of the two-in-one of chairman and general manager on corporate performance, would enhance the negative effect of the board size on corporate performance, would weaken the positive effect of directors’ remuneration on corporate performance, would eliminate the adverse impact which comes from the change of the board chairman on the company performance.Finally, the paper still puts forward some corresponding policy recommendations for the above conclusions in the conclusion part.