China’s Listed Commercial Banks Corporate Governance, Executive Compensation And Performance Research

In today’s economic era, the most important part is finance, while the core in thefield of finance is undoubtedly banking industry. The transformational reform of ourgovernment in banking industry started from the middle of1990s. Among them, thecore of reform of numerous commercial banks is to perfect and improve the companygovernance structure and compensation system of senior executives. After ourcountry’s joining WTO, many foreign investors participated into the investment infinancial market of our country. In order to improve the competitive capacity of ourfinancial market in the overall environment of international finance, the commercialbanks of our country have always been constantly accelerating development. Since2004, the form of equity ownership of commercial banks has also been changingconstantly and our government has adopted a series of measures to deepen the reformincluding improving the governance structure of board of directors, perfecting thegovernance mechanism of the company and optimizing the compensation system ofsenior executives, etc. Although there are many competitive commercial banks in ourcountry currently, such as state-owned commercial banks, joint-stock commercialbanks and local commercial banks, the disclosure system is not perfect yet, so wemainly studied the A-share listed commercial banks and hoped to be of referencesignificance for the banking industry of our country to improve performances.This paper studied the relationship between company governance and businessperformance of commercial banks in our country as well as executive compensationand business performance, which can not only macroscopically understand the currentstatus of company governance and executive compensation of commercial banks in ourcountry and the existing drawbacks, but also propose targeted suggestions andimprovement measures for the existing improper parts. This has extremely importantsignificance of theoretical research and realistic practice for our commercial banks inoptimizing their company governance structure, perfecting compensation system ofsenior executives and improving the international market competitiveness of our commercial banks. Taking the relevant research basis of company governance andexecutive compensation of foreign and domestic commercial banks as the theoreticalbasis and16A-share listed commercial banks within China as the research objects, thispaper collected, systemized and collated their annual report data from2007to2012,and respectively empirically studied the relationship between company governance andperformance of commercial banks in our country as well as executive compensationand performance at present from the aspects of company governance and executivecompensation by applying the methods of descriptive statistical analysis andlinear-regression analysis and quadratic regression in terms of executive compensation.Thereinto, this paper measured the performance of commercial banks with return onequity (ROE). The empirical results show that the proportion of independent directorboard has a significantly positive correlation with ROE, but there is no obviouscorrelation between the shareholding ratio of board of directors and ROE; the nature ofthe first majority shareholder is significantly correlated positively with ROE, while theownership concentration has a significant negative correlation with ROE, the executivecompensation and ROE present an U-shaped relation and the shareholding ratio ofsenior executives is negatively correlated with ROE. In the end, this paper proposedsuggestions and research prospect.