Performance, Corporate Governance, And Top Executive Turnover

Public company executives, a company’s core key figures, play an important role in the company’s strategic decisions, development goals and operational objectives under the modern corporate system with ownership and management separated and their personal behavior will heavily impact on the long-term development of the company. Thus, the executive departure will make a major change in a company’s strategies, equities, operational objectives which are closely related to the interests of investors. In the case of lacking external governance mechanism, to explore the factors influencing the executive departure can reflect a company’s internal governance and are good for protecting the interests of stakeholders such as investors, creditors and so on.The object of this paper is Shanghai and Shenzhen A-share listed companies related to executive departure during2007-2010. The issues explored in this paper are as follows:First, does the performance of listed companies in China have significant effect on executive departure? Second, what is the impact of listed company’s internal governance such as characteristics of Board of directors, proportion of executive stock ownership and proportion of large shareholders on executive departure? Third, whether proportion of executive stock ownership will reduce the probability of executive departure when the company’s performance is poor. Fourth, we will analysis the regulation of proportion of large shareholders on the impact of proportion of executive stock ownership on executive departure. There are five parts in this paper:Chapter one, introduction. This part briefly explains the background, the purpose and the basic framework of this paper.Chapter two. literature review and theoretical analysis. This part reviews the relevant studies on executive departure and corporate governance at home and abroad. These studies are mainly related to five aspects:corporate performance and executive departure, characteristics of Board of directors and executive departure. proportion of executive stock ownership and executive departure, proportion of large shareholders and executive departure and other factors.Chapter three, research hypothesis and study design. This part presents the research hypotheses of this paper on the basis of the earlier theoretical analysis and describes-the sample selection, data sources, variable’s definition and measurement, research methods and the construction of research model.Chapter four, empirical test and result analysis. This part appears the conclusions of this study with SPSS20.0used as a piece of statistical software: There is a significant negative correlation between corporate performance and executive departure. Board scale increasing will reduce the probability of executive departure.The number of independent directors increasing will increase the probability of executive departure. When the post of chairman and general manager united, the probability of executive departure will be reduced. The higher the proportion of executive stock ownership is, the lower the possibility of executive departure is. The proportion of executive stock ownership increasing will reduce the negative correlation between corporate performance and executive departure. The higher the proportion of large shareholders is, the higher the possibility of executive departure is. The proportion of large shareholders increasing will reduce the negative correlation between the proportion of executive stock ownership and executive departure.Chapter five, conclusions, recommendations and limitations. This part combings the full-text content, as well as research results, makes rationalization proposals to improve corporate governance and proposes the possible research directions combined with the limitations of this paper.