Empirical Research On The Effectiveness Of Stated-owned Companies’ Coporate Governance

Along with the development of science and technology, the enterprise scale increases, so does the complexity of operation and management. Corporate governance has become the inevitable outcome of the modern enterprise development process. More than one hundred years ago, the British economist, Marshall, has raised the concept of "Corporate Governance" at the earliest. Since then, Berle and Means proposed the concept of the separation of ownership and management rights in their book "The Modern Corporation and Private Property". The Cadbury Committee published the financial aspects of corporate governance in1992. Corporate governance is becoming a hot spot of global attention. The academic study of corporate governance in western countries reached its peak in the1990s. But the enterprise has formed a distinctive pattern of corporate governance and structure in practice. The Asian financial crisis, especially the United States financial scandals, such as Enron, WorldCom, make the corporate governance a worldwide topic. Unlike western countries, modern enterprise system in China can mostly attribute to reformation of state-owned enterprises. And state-owned enterprises as an important part of our country’s economic system reform, it also reflects the reform course of the reform process of corporate governance. Since1978, the state-owned enterprises have experienced several stages, such as the decentralization and benefits, contracting management and shareholding system reform. Again in April,2011, Ex-Premier Wen Jiabao emphasized that we should improve the rational flow of state-owned capital, and should accelerate the company reform. So far, with the Shanghai stock exchange (1990) and the establishment of the Shenzhen stock exchange (1991), as well as other support the emergence of the law, the basic legal framework and assets supervision system in our country has been preliminarily built. How to form the effective corporate governance and, to build effective governance structure, should become an important issue of Chinese state-owned enterprises and state-owned assets regulatory problems the present stage. Shareholder governance, the board of directors’ governance, and management incentive are the three most important components of corporate governance. If the relationship between them and corporate performance can be accurately explained, it will be possible to provide guidance to improve the low efficiency of state-owned enterprises.Based on the theory of corporate governance, and principal-agent theory, according to the characteristics of state-owned enterprises, the Chinese state-owned listed companies in2012,674companies in total were selected as the sample. This dissertation used factor analysis, descriptive statistics, correlation analysis, the mean comparison and multiple regression analysis method, to analyze the relationship between corporate performance and sample’s overall level of corporate governance (result from factor analysis), shareholder governance (the biggest shareholder’s stake, annual shareholders meeting attendance, sum of squares of the top five shareholders’ stake, sum of squares of the top ten shareholders’ stake), the board of directors governance (board size, proportion of independent directors) and management incentive (remuneration of the top three directors, remuneration of the top three senior management, shareholding ratio of directors and shareholding ratio of senior management), respectively.The empirical results show that the overall corporate governance of state-owned listed companies is effective. Corporate governance and corporate performance has a significant positive correlation. Grouping test results show that only when corporate governance evaluation index reaches a certain level, can play a positive promoting role in the enterprise performance improving process. For Corporate governance factors, the common factor of shareholder governance variable has a positive correlation with net assets yield. There is no significant linear relationship between board governance and ROE. Monetary compensation has a good effect on incentive, thus leads to higher ROE. But management equity incentive shows no obvious linear relationship. Robustness test results reveal the similar outcome. In conclusion, state-owned enterprises’corporate governance has made some achievements. The "insider control" phenomenon in state-owned enterprises is serious, but it does not affect corporate performance. Otherwise, it brings some positive effect. The independent director has not done a good job in supervision decision-making. Its impact on the business performance is not significant. Management personnel’s monetary compensation incentive effect is superior to equity incentive. The effectiveness of the state-owned enterprises corporate governance still needs to be improved, upholding the reform policy of the state council.