| China’s SOE are the corporate governance form with distinctive institutional background characteristics in the process of economic transformation.Operators often have greater management rights and distribution rights,which makes SOE have serious problems of insider control.The governance of SOE has been concerned by the government and academia.Making use of the influence of party organization on the management of SOE is the top-level design made by the central government for the reform of SOE.How to transform the top-level design of the central government into the micro operation form of modern SOE,combine party leadership with corporate governance,explore and design a new form of the party organization’s governance of SOE,has become an important problem that needs to be solved urgently by the academia and the competent departments of SOE.The existing research mainly focuses on how the party organization plays its governance function in the internal governance of SOE.The research shows that.although party organizations can play a certain role in the corporate governance of SOE,whether they can effectively play the governance function depends on their independence.Within state-owned enterprises,the commission for discipline inspection oversees the party committees at the same level and is led by the party committees at the same time,which seriously affects the commission’s independence.Therefore,the discipline inspection commission’s participation in the internal governance of state-owned enterprises is often restricted by the independence,which makes it difficult to exert the supervisory function.Only by combining with external governance can the efficiency of governance be improved.Since 2013,Central Discipline Inspection Commission(CDIC)has carried out a large-scale inspection work.The inspection work is a new form for the party organization to participate in corporate governance,it can effectively solve the problem of lack of independence in the internal supervision of party organizations.And it has formed a pure quasi-natural experiment in the academic research.Based on this,this paper studies the impact of CDIC inspection on the operation performance.The concrete conclusions and analysis process are as follows:(1)In the short term,the inspection work has brought a certain impact on the performance of the enterprises.Referring to previous studies,four indicators are selected to measure business performance:total asset turnover rate,total asset return rate,net asset return rate and business income growth rate.The regression results show that after the inspection,business performance declines to a certain extent,indicating that strong supervision has a negative impact on performance in the short term,and long-term performance needs to be studied in a longer period of time.(2)Part of the reason for the decline in operating performance is the decline in earnings management intensity,The accounting profit that was originally due to accounting manipulation was squeezed out.In the long run,the inspection work is expected to improve the transparency of information disclosure by reducing the earnings management of the enterprises being inspected,and then to have a positive impact on the value of the company by reducing the financing cost of the company.Through empirical analysis,this paper finds that the earnings management intensity of the firms inspected decreases significantly after the inspection,and the negative impact of the inspection on business performance is only significant in the samples with high intensity of related transactions and low proportion of independent directors.Therefore,it is believed that part of the reason for the decline in business performance caused by inspection is that the stronger corporate governance plays a supplementary and strengthening role in internal governance,and the related transactions and earnings management of companies are controlled,which results in the decline of false high business performance on the books.In the long run,the inspection work may enhance the transparency of information disclosure by strengthening the supplementary role of internal governance and reducing the degree of earnings management,and then have a positive impact on corporate value by reducing the cost of financing.(3)Market participants expect that in the short term,the inspection work may have a negative impact on the performance of the enterprises being inspected,and the stock price reaction after the inspection announcement is negative.This paper uses the event study method to study the changes of cumulative abnormal returns in different time windows before and after the inspection announcement.The results show that before and after the inspection announcement date,the cumulative abnormal returns of the central enterprises are significantly negative,indicating that market participants expect that in the short term,the inspection work may have a negative impact on the operating performance of the enterprises under inspection.Therefore,a negative stock price reaction is given.The innovation of this paper lies in:(1)It enriches the academic research on the party organization’s participation in the corporate governance of SOE about the governance form.Previous studies mainly focused on the party organization’s participation in the internal governance of SOE,and few paid attention to the external governance of the party organization to SOE.(2)This paper is the first to use large sample empirical study to analyze the impact of CDIC inspection work on corporate governance.It also has important policy implications for the effect evaluation and system improvement of the current inspection work at all levels. |
