Empirical Research About Directors Accredited By Non-controlling Shareholders And CEO Turnover、Dividend Policy

As an important internal corporate governance mechanism, the board structure andits governance effects have been the focus of academic research in corporate governance.Previous studies in empirical research more concerned about the size of the board, theproportion of independent directors, the board gender characteristics and its economicconsequences. This dissertation studies the effect of the board characteristics to theagency costs of state-owned listed companies.Because of holding the equity, the non-controlling shareholders have an incentive tocare about corporate performance, and even directly involved in business management.Stationed in the board of directors is an important way to achieve the interests ofnon-controlling shareholders. In the operating practices of the company, most of themajor business decisions are made on the board of directors, so the directors accredited bynon-controlling shareholders on the one hand can understand company’s management andmake some advises to board, on the other hand, they can fully convey the interests ofnon-controlling shareholders, and they can balance and coordinate the conflict of interestsbetween controlling shareholders and non-controlling shareholders. So, unlike theindependent directors, the directors accredited by non-controlling shareholders havestronger incentives to play an active role in the board of directors. In addition, they aremay be more independent in compare with the controlling shareholders and the companyexecutives, because their selection and produce are from the hold the substance of thevoting rights of other shareholders in general meeting. Therefore, from this perspective,the directors accredited by non-controlling shareholders for the supervision of thecontrolling shareholders and corporate executives may be stronger.Based on the state-owned listed companies during2003and2010, we find thatdirectors accredited by non-controlling shareholders may play important roles incoordinating the conflict of interest among controlling shareholders and non-controllingshareholders. Directors accredited by non-controlling shareholders significantly improvethe association between CEO turnover and poor performance. Moreover, the higher ratioof directors accredited by non-controlling shareholders in the boardroom, the strongerassociation between CEO turnover and poor performance is. In contrast, no evidenceshows that board size, the ratio of independent directors, and the percentage of shareowned by non-controlling shareholders significantly improve the association between CEO turnover and poor performance. At the same time, we also find that directorsaccredited by non-controlling shareholders significantly influence the formulation ofdividend policy. Moreover, the higher ratio of directors accredited by non-controllingshareholders in the boardroom, the higher dividend payout ratio is. The paper contributesthe literature on governance mechanism of board of directors from a new perspective.Over the years, China’s state-owned companies are characterized by “dominance ofthe governance” and “internal control”. So how to effectively design and improve thecorporate governance structure in order to reduce the widespread agency costs instate-owned enterprises is attracted wide attention. The empirical evidence of this paperhave a certain reference value in further improving the governance structure ofstate-owned companies, and reducing the agency costs of state-owned companies.