Supervisory Board Governance And Agency Cost By Enterprise Life Cycle Theory

Corporate governance has been the focus of theory and practice in recent years. Supervisory board governance is important to corporate governance.The characteristics of enterprises in different stages of life are not the same, so in different life stages, the role of supervisory board governance to agency governance will be different. Supervisory board governance is a part of corporate governance. In view of the shortcomings of the research on the relationship between supervisory board governance and agency cost, this paper hopes to analyze the role of supervisory board governance on agency cost through the analysis of the characteristics of supervisory board governance in different life stages, and to discuss the relationship between supervisory board governance and agency cost from the perspective of theoretical analysis and practical research.To this end, supervisory board governance as the research subject, according to all China’s A-share listed companies from 2010 to 2014 as samples, through empirical research on the role of supervisory board governance, distinguish which factor is negative to agency cost and which factor is positive to agency cost. Using empirical study and normative study to explore supervisory board governance and agency cost in order to provide a reasonable and effective corporate governance mechanism, and enhance the adaptability of the external environment changes, and hope to provide a reference for China’s supervisory board governance.Based on China’s unique national conditions, this paper discusses the interaction mechanism between supervisory board governance, agency cost and enterprise life cycle theory. The main contributions of this paper are as follows: firstly, this paper studies the role of supervisory board governance in different periods according to a new perspective. This paper regards the enterprise as a living body, has been continuously adapt to the continuous development of society, the need of different life stages in supervisory board governance is different. Secondly, we can get the way to improve the effectiveness of supervisory board governance though the conclusions of the study in the different enterprises stages. It is necessary to establish effective supervisory board governance to reduce agency cost. Finally, this paper uses the newest data. The empirical date of this paper is all China’s A-share listed companies from 2010 to 2014. The process of corporate governance is a dynamic and continuous process. The latest research results are beneficial to the management structure of the board of supervisors, which has a good effect on reducing agency cost. The establishment of complete supervisory board governance structure plays as a loyal guard to enterprises, and lays the foundation for the healthy development of enterprises.Summarizing descriptive statistics, correlation analysis, multiple regression analysis and robustness test results, here is the following conclusion. In the introduction stage,enterprises’ maturity is not high, supervisory board governance have little effect in agency cost. The enterprises hold the annual meeting of supervisory board governance because of corporate law. Then enterprises enter the growth period, with the expansion of the size of the enterprise; the scale of supervisory board governance began to expand. The scale of supervisory board governance is significantly negatively related to agency cost. The greater the size of supervisory board governance is, the higher the agency cost of the enterprise is. After the enterprises enter into the mature period, supervisory board governance mechanism starts to play an important role in the agency cost. The higher proportion of shareholding is, the weaker the independence of supervisory board governance is. Supervisory board governance will cover up the senior management personnel to help them damaging the interests of the enterprise to obtain compensation, which should cause the attention of the enterprise. In the mature period, the proportion of the number of employees in supervisory board governance has a significant positive impact on agency cost. After the enterprises go into the recession stage, the enterprises have the trend to quit the stage. Supervisory board governance at this time will be useless, the effect on agency cost is not significant, but we can find that the proportion of shareholding supervisors on the agency cost still exist positively. Now the enterprises should pay more attention to the relationship between the senior management personnel and the enterprises. The empirical research results show that there is a correlation between the corporate life cycle and the supervisory board governance; supervisory board governance in different corporate life cycle stages has a different influence on agency cost.