The Influence Of Management Power Of Subsidiary On Its Performance

The influence of parent company on subsidiaries is very important,which effectively explains why some subsidiaries achieve higher achievements than others.Through the internal relations of the group,subsidiaries can obtain resources at a lower cost,so as to improve market competitiveness.However,the interests of the parent company and the subsidiary company are not always the same.For its own benefit,the parent company may do acts against the subsidiary company.In recent years,in order to improve the efficiency of corporate governance,the Ministry of finance,China Securities Regulatory Commission and other regulatory agencies have issued a series of laws and regulations,but in reality,there are still frequent incidents of parent company encroaching on the interests of subsidiaries.The event of St Kangmei Pharmaceutical(600518)interests encroachment in 2019 once again shows that the parent company's"hollowing out" behavior of subsidiaries cannot be eliminated only by relying on the external regulatory environment.Based on this,this paper explores how subsidiaries restrain the parent company's encroachment from the perspective of internal governance.By combing the relevant literature,this paper finds that scholars mainly study the governance of parent subsidiary companies from the perspective of "one-way governance" and "two-way governance".Based on the perspective of "one-way governance",scholars believe that the parent company is absolutely dominant in the governance of parent subsidiary company,and the subsidiary company is only a passive receiver.However,scholars based on "two-way governance" think that subsidiaries have the ability to bargain and can gain certain autonomy in the game with the parent company.In 2017,Boya Stem Cell Technology Co.,Ltd.(6001650)sued its parent company,xinrihengli,which showed that the subsidiary company had certain autonomy in the governance of the parent subsidiary company.At the same time,scholars also paid attention to the limitations of "one-way governance" and the rationality of"two-way governance".The management of subsidiary has more power,which is one of the effective means for subsidiary to obtain autonomy.Based on this,from the perspective of "two-way governance".this paper studies the effect of management power of subsidiary on the parent company's usurpation of interests,and further explores its impact on the company's performance.Based on literature research and empirical research,this paper takes A-share listed parent and subsidiary companies as research samples to explore the impact of management power of subsidiary companies on the interests of the parent company,and further explore its impact on corporate performance and the mechanism of its impact.Through theoretical analysis and empirical test,the following conclusions are drawn:(1)the management power of subsidiaries can promote the performance of the company;(2)the management power of subsidiaries can promote the company's performance;(3)the parent company's interest encroachment plays a part of intermediary role between the management power and the company's performance of subsidiaries,that is,the management power of subsidiaries can restrain the behavior of the parent company's interest encroachment,so as to improve the company's performance;(4)the management of subsidiaries the influence of level power on the parent company's usurpation of interests is regulated by the proportion of independent directors.In the case of a high proportion of independent directors,the stronger the inhibition of the subsidiary's management power on the parent company's interest encroachment is.The main innovation of this paper is based on the perspective of "two-way governance".By exploring the relationship between the management power of subsidiary,the interest encroachment of parent company,institutional investors'shareholding and the performance of subsidiary,it is proved that the improvement of the management power of subsidiary can restrain the interest encroachment of parent company on subsidiary company,and then promote the performance of subsidiary company,and further reveals the opportunity This paper constructs the regulatory role of investor's shareholding between the management power of subsidiary and the interest encroachment of parent company.