The Empirical Research On The Relationship Of Corporate Governance Structure And Financial Distress

Financial distress not only have an important effect on firm’s sustainable management and stakeholder’s interests,but cause a certain impact on the macroeconomic stability. Thus,academic research concerned a lot on financial distress. At first, most studies only limited to financial indicators,and centred around prediction technology,these research implies a good corporate governance structure, thus,the influence of institutional factors on the financial activities of enterprises will be covered.However, many studies have been used to investigate the impact of corporate governance structure in recent years,and confirmed the effect is significantly.Therefore, this article is trying to combine corporate governance structure with financial distress, and put forward suggestions for preventing financial distress from the aspects of perfect corporate governance structure.For the convenience of empirical research, this article first defines the concept of financial distress,and pointed out that governance structure defects is an important factor leading to companies financial distress through the analysis of its causes.Then,summarized the the meaning of governance structure,and selected five typical factors which can be on behalf of the company governance structure characteristics, including the characters of ownership structure, board of directors,board of supervisors, management experience and external management. After that, the article analyzed its impact on financial distress from the five aspects respectively, and proposed sixteen hypothesis according to the the theory.We choosed 200 samples including 50 ST companies and 150 non ST companies.The 50 ST companies were listing corporation which was first ST in the year 2011 to 2013.Then, draw the research conclusion by the way of logistic regression.Results pointed out that ownership concentration and the probability of financial distress’ s relevence is “U”- type,the executives average age also have the same impact on the probability of financial distress,the number of shareholders conference and the probability of financial distress’ s relevence is inverted "U"- type,the years of listed company play the same effect,ownership balance degree、whether the Chairman of the board is the general manager 、the number of the board of supervisors meeting 、The number of board meeting and the type have a negative correlation with financial distress,whether the company suffer public punishment due to irregularities has positive correlation with financial distress. The Nature of equity, board size, independent directors’ s proportion, board of supervisors and the number of executives had no significant influence on financial distress.Finally, combining the results of empirical studies, and actual conditions in China, this article proposed suggestions from the effect of perfect governance structure to avoid the company running into financial distress.