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Top-Manager Characters, Corporate Governance and Inefficient Investment

On 02/10/2014, in Management, by rain

Corporate Investment is one of the three major financial decision-making behavior, which is the key to corporate profits, and which is decided to base the size of the interests of shareholders. Enterprises through Investment activities to get return on Investment. Therefore, the efficiency of corporate investment behavior is directly related to the ability of the business to maximize value, but also the relationship between the shareholders can receive maximum benefits. Investment has also been a hot research scholars at home and abroad.Based on Economic activity in the “bounded rationality”, we can see the manager’s decisions are not optimal, mainly due to the complex and changing environment, and managers the ability to understand the environment and cognitive ability are limited. Also, because the prevalence of internal principal-agent problem, our investments can not be completely optimal, namely, the existence of non-investment efficiency.Managers of listed companies as a corporate investment behavior makers and impl em enters, the Enterprise has a direct impact on investment behavior. The efficiency of investment and different companies vary, so what factors affect the efficiency of investment in non-business? This paper will explore the managers of listed companies in China non-personal characteristics of the efficiency of corporate investment levels. And taking into account the existence of corporate governance mechanisms, further analysis of the corporate governance of the personal characteristics and business managers of non-regulation of the level of investment efficiency. This research mainly includes the following six parts:First, proposed this research background, a brief study show that the theoretical and practical significance, explained the need for this study. Then put forward the Basic logic of this analysis framework and research methods. Finally, we illustrate this feature.Second, sort and review the relevant literature at home and abroad. In1984 Hambrick and Mason made the famous “upper echelons theory”, which managers have the characteristics of the theoretical basis of the official. Upper echelons theory suggests that the Management team characteristics and team members in-depth psychological, behavioral characteristics, whereas the deep-seated psychological and behavioral characteristics will directly affect strategic decision making and selection, can be seen the characteristics of managers associated with Management practices. Domestic and foreign scholars, empirical studies have verified this. Principal-agent problem is accompanied by generation of a modern corporate system, prevalent in the company. The principal-agent problem is an important manifestation of the conflict the interests of managers and shareholders, managers do not always act to maximize shareholder value as a target, often exhibit behavior of individual self-interest of managers in the investment behavior on the performance of the non-investment efficiency. This is not only due to the presence of principal-agent problem, and also based on information asymmetry. Shareholders are not directly involved in the company’s Management, between managers and shareholders, there is a serious information asymmetry, managers can easily lead to moral hazard. Thus, managers are closely related to behavior management and personal characteristics on the efficiency of corporate investment behavior of non-correlation. For this statistical data, select the manager’s age, Education, gender, educational background and demographic characteristics of the five terms in order to represent the manager’s personal characteristics. Domestic and international research shows that managers of these demographic characteristics and level of business investment in non-efficiency-related, but different academic results are not consistent.Since the existence of principal-agent problem, shareholders in order to prevent managers to grab personal gain, on the development of a series of corporate governance mechanisms to monitor and restrict the behavior of managers. Current corporate governance mechanisms into internal governance and external governance mechanisms can be divided into four specific, that is, incentives, checks and balances mechanism, external takeover mechanism and the proxy contest mechanism. This paper only analyzes the company’s internal governance mechanism, the mechanism of incentives and checks and balances, select the chairman and general manager of the two jobs separate, the proportion of independent directors and executives to study three variables stake. Domestic and international research shows that corporate governance and business efficiency level of investment is a non-related relationship.The third, analysisd the relationship between theoretical of managers personal characteristics, corporate governance and business and investment behavior, and then make the hypothesis of this paper.The fourth, the hypothesis was studied on the basis of design. This paper selected the2009and2010in the Shanghai Stock Exchange and Shenzhen Stock Exchange listed companies as a1283sample of empirical research. Second, build an empirical model of this article, that manager personal characteristics and level of business investment in non-efficient models, and managers of personal characteristics, corporate governance and business model of non-efficient level of investment. And define the model and measure the variables, the empirical analysis for the next preparation, which is non-efficient investment level explanatory variables we refer to Richardson’s method, the level of investment equation residuals as a non-efficient level of investment instead of a variable.The fifth, it will be mixed together to form a mixed data in2009and2010sample data to be2566samples at the basis of the previous paper, and use EVIEWS6.0and SPSS13.0software to analysis,such as the model for each regression analysis to test the foregoing theoretical assumptions.Finally, according to the above analysis come to the conclusion. First, the efficiency of China’s listed companies, the prevalence of non-investment behavior; followed by personal characteristics of the business managers of non-influential role in the efficiency of investment behavior, specifically in the manager’s age, Education, educational background can significantly affect the efficiency of non-investment level, and sex and the term non-efficiency of the Enterprise is not significantly affect the level of investment; final corporate governance mechanisms on the personal characteristics and business managers of non-regulation of the level of efficiency investments are not fully achieve the desired objectives, corporate governance mechanisms still need further improvement can be summarized the proportion of independent directors on the management of personal characteristics (education) affect the efficiency of investment behavior can play a non-expected inhibition, chairman and general manager of two level-one personal characteristics of managers (gender) level of investment and business from the non-efficiency to the expected inhibition, executive ownership proportions of managers personal characteristics (age, education, educational background, and tenure) and business investment in non-efficiency of inhibition is expected to play.The main features of this study is to examine not only the analysis of the characteristics of the individual managers of non-listed companies, the efficiency of investment behavior, but will also regulate corporate governance mechanisms as variables, to analyze the mechanism of regulation of corporate governance under the personal characteristics and business managers non-relationship between the efficiency of investment behavior.

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An Empirical Research on Managerial Characteristics and Corporate Social Risk

On 02/10/2014, in Management, by rain

Since the1980s, with the global corporate Social responsibility of booming movement,corporate Social responsibility has become a widespread community concern, companies arefacing a new risk, which we call “corporate social risk”, so many countries in the world havebeen made laws and regulations in respect of corporate social responsibility. Moreover,since2008our country has been released a series of documents on corporate socialresponsibility and made “risk control ability” as one of the business performance evaluationcriteria of the managers in central enterprises. Managers as company strategic decisionmakers and Management leaders play a vital role in the control of corporate social risk. Anexcellent Management team will promote the company to actively fulfill their socialresponsibility and control corporate social risk to achieve the long-term development of thecompany.Based on the risk society theory, stakeholder theory, upper echelons theory andcorporate governance theory, this paper discusses the nature, characteristics and measuringmethod of corporate social risk, analyzes the relationship between managerial characteristicsand corporate social risk, then, we consider A-share listed companies in Shanghai exchangeand Shenzhen exchange between2008and2010as the samples to study the relationship. Wefind that managerial characteristics impact corporate social risk. Specifically, the proportionof male managers is negatively related to corporate social risk significantly, the average ageand “dual” leadership structure of the board of directors are positively related to corporatesocial risk significantly, the size of the board of directors and corporate social risk show ” U”type relationship, however, the average Education degree and the proportion of independentdirectors are negatively correlated, but not significantly. Further distinguishing the companylocation indicates that there are some different impacts among companies in differentregions by managerial characteristics on corporate social risk, mainly in the proportion ofmale managers, the average age and the size of the board of directors.

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The Empirical Research on Manager Overconfidence, Corporate Governance and Capital Structure

On 02/10/2014, in Management, by rain

Over the years, academic researches on capital structure always begin with theassumption of “rational man”,they ignore the psychological bias of managers.Thetheory of manager over-confidence breaks the traditional theory of “rational man”assumption,it is closer to reality cases and can better explains the financial behavior.Therefore, this paper seeks to explore the relationship between manager overconfidenceand capital structure, and explores the relationship between capital structure and manageroverconfidence under the corporate governance variable.On the basis of literature review of related research both domestic and oversea, thispaper makes use of theory of behavioral finance, capital structure and corporategovernance etc., and combines both normative and empirical research methods to make aresearch on how manager overconfidence affects capital structure from the viewpoint ofcorporate governance based on the experimental data from2007to2010of ChineseShanghai and Shenzhen listed companies. Firstly, in the view of behavioral finance, thispaper discusses manager overconfidence, corporate governance and capital structure inorder to indicate generation mechanism and the action mechanism of manageroverconfidence affecting capital structure and the connection of them from the viewpointof corporate governance. Secondly, it extracts a main cost variable by the means ofprincipal component analysis and objective assignment method, this indicator uses toexplore the relationship between capital structure and manager overconfidence, and testthe relationships between manager overconfidence and capital structure under the impactof corporate governance. Lastly, on the basis of theoretical and empirical research, thispaper makes countermeasure research how to restrain the impact of manageroverconfidence on capital structure from the viewpoint of corporate governance.Empirical analysis shows that the degree of manager overconfidence andasset-liability ratio is positively correlated,it is to say that the overconfident managers ismore in favor of debt financing than equity financing; after joining the corporategovernance variables, we find that the degree of overconfidence of the manager is decreasing in the companies that have good corporate governance, that is to say goodcorporate governance level has a correction effect on the degree of overconfidence of themanager.

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Stakeholders-oriented Toward Internal Control Evaluation Research

On 25/09/2013, in Management, by rain

Following the “Anran”, the”Worldcom” and a series of financial scandal, theinternational society has given height attention to the internal control system. Internalcontrol is an important means of corporate governance, internal control evaluation isan important assessment to the business, scope of business, the level of competition anrisk, good internal control evaluation contributes to perfecting internal control system,and then improves the Management efficiency of the Enterprise.With the development of economy, the traditional emphasis on the interests ofinvestors “shareholders first” Management more and more damage the interests ofother stakeholders, stakeholder governance theory was gradually introduced into thecorporate governance and showed a very strong force.”The Enterprise internal controlassessment guideline” provides guidance for manager to evaluate the effectiveness ofenterprise internal control self-assessment, but the Enterprise still has a lot ofautonomy on the internal control evaluation. This article, based on the classificationof stakeholder, analyses the key points of the evaluation of internal control ofenterprises by the stakeholder. On the basis of stakeholder theory, building theevaluation of internal control system, in order to expand the existing internal controltheory research category, and to provide more scientific and theoretical basis for theinternal control evaluation.The article includes six parts. The first part briefly analyzed the background ofinternal control evaluation research, and revealed the theoretical and practicalsignificance, overviewed the theory. Secondly, introduced the stakeholder theory,analysed the stakeholder theory and corporate governance, introduced the relationshipbetween internal control evaluation and stakeholder theory,fully illustrated the studyof necessity and possibility, provided the theoretical foundation to the followingresearch. The third part of the article, based on the analysis of the company’s internalcontrol evaluation of the2010year of companies listed on GEM, found that listedcompanies’ internal control evaluation of existing problems, and we found that theinternal control evaluation study in the perspective of stakeholders was necessary. Thefourth part of the article stakeholders of the internal control evaluation of personalityand the key points were analyzed. The fifth part of the article of the stakeholders inthe evaluation of internal control of key points were proposed based on the construction in the perspective of stakeholders internal control evaluationsystem,content to be introduced, the Basic frame of the system and results areintroduced, and combined with the case put forward the company internal controlassessment. Finally, introduced the paper’s conclusions and disadvantages, built thestakeholders-oriented toward internal control evaluation research by the internalcontrol self-assessment,internal assurance and the external guarantee mechanism.

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Empirical Study on Board Stability and Performance

On 25/09/2013, in Management, by rain

Corporate governance mechanisms, especially board-related issues, have drawnattention from both academia and business community all over the world. This papertries to conduct an in-depth research on the relationship between board stability andcorporate performance based on previous studies.The paper screens out262Chinese listed firms which had their IPOs before Dec.31,1999. The study runs regression analyses on the panel data of these firms from2001to2010. The empirical results indicate that state-owned companies andnon-state-owned ones seem to have distinct board mechanisms. For state-owned firms,the significant connections between board stability and corporate performances statethat previous poor (good) performances will lead to board instability (stability). Inaddition, the ratio of shares held by top10shareholders, the ratio of independentdirectors in board and change of board chair have significantly correlations with boardstability. However, there are no clear evidences proving that similar relationshipbetween board stability and performance exists among non-state-owned companies.What’s more, current board stability has significant impact on performance whileLagged board stability shows no significant connection. The variables of current andlagged leverage rates and the growth rate of total assets are also significantly relatedto corporate performance.This paper conducts robust tests by introducing new variables such as the returnon total assets, the ratio of shares held by insiders, the current and lagged growth ratesof revenues and so forth. The results are consistent with previous findings.

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Corporate Governance, Corporate Investment Behavior and Corporate Performance

On 25/09/2013, in Management, by rain

Companies are playing increasingly important roles in socio-Economic system. Sostudies on corporate governance have caught wide concern from both theorists andsubstantive industry with researches becoming more and more detailed, such as studieson board structure, shareholder participation and independent directors’ remuneration,etc. These studies provide us with valuable empirical data to further improvement ofcorporate governance mechanism. However, less of literatures related to corporategovernance involved by what means does corporate governance affect economicconsequences. Based on the paradigm of “governance mechanisms-behavior-Economic consequences”, we try to find out the possible mechanism of how corporategovernance mechanisms have an impact on corporate performance.First of all, we quantify the level of corporate governance, and then we go onfurther study on the relationship between corporate governance level and corporateperformance and the relationship between Investment behavior and corporateperformance. Combining with the corporate governance theory, we study the mediatingeffect of corporate governance mechanisms on corporate performance with corporateinvestment behavior as a mediating variable, and we quantify the level of thismediating effect. Our empirical results show that: first, though corporate governancelevel in China is uneven; overall corporate governance level has been a gradualincrease.Second, underinvestment companies in China are more than that ofoverinvestment, but overinvestment is more serious than underinvestment. Third,corporate governance index and corporate performance is significantly positivelycorrelated.What’s more, better corporate governance can alleviate agency problemsbetween Management and outside investors and reduce the company’s inefficientinvestment behavior.Besides, inhibitory effect of corporate governance onoverinvestment is better than that on underinvestment. Last but not the least,corporategovernance and Investment behavior are factors affecting corporate performance, inthe process of affecting company’s performance, investment behavior is as a mediatingvariable, and it only plays a partial mediating effect.

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Corporate Governance of State-owned Enterprises in China and Countermeasures

On 23/09/2013, in Management, by rain

Corporate governance is the core of the modern Enterprise system, the survival anddevelopment of the modern Enterprise depends largely on corporate governance. China’sstate-owned enterprises is an important foundation of the national Economic developmentand the key force, since the establishment of modern enterprise system, corporategovernance reform of state-owned enterprises has made some achievements andexperiences since the Third Plenary Session of the14th Party Congress, but also theconstruction of the corporate governance system far from complete, are faced with manychallenges and difficulties in the theory and practice. The corporate governance ofstate-owned enterprises at home and abroad has been made in certain research results andpractical experience, corporate governance, this problem has not been fully resolvedfrom the theory and practice. Options and corporate governance model closely related tothe development of practical and cultural traditions of the country to operate Chinastate-owned enterprises must be combined with the universal values of corporategovernance theory, to meet the requirements of Chinese characteristics. Neitherregardless of China’s national conditions theory and practice of copying foreign, can notbe overemphasized with Chinese characteristics, while ignoring the Basic principles ofcorporate governance. This paper uses the theories of Economics, Management, system ofgovernance of state-owned enterprises, conducted in-depth analysis of the reasons of thegame model of state-owned enterprise corporate governance problems, the rich corporategovernance, especially state-owned enterprise corporate governance theory.This article is divided into four chapters, the first chapter is a literature review,including foreign, domestic Theoretical Research on corporate governance ofstate-owned enterprises. The second chapter of China’s state-owned enterprisesgovernance the conflicting objectives of the dual role of the State, the board ofsupervisors role in weakening insufficient incentives for moral hazard of managers andbusiness operators and other issues and in-depth analysis of the reason for the existenceof these problems. The third chapter describes the Basic approach of the United States,Japan, Germany’s state-owned enterprise corporate governance and China can learn from the successful experience. Chapter IV of the problems for China’s state-owned enterprisecorporate governance and the reasons put forward countermeasures and suggestions ofinvestor behavior norms, improve the board of supervisors system constraint thebehavior of managers and improve the operators incentive system.

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The Research on optimization of K CORPORATION LIMITED’s Equity Incentive

On 23/09/2013, in Management, by rain

Equity incentive is a kind of long-term incentive and restraint mechanism. Thismechanism is carried out through granting the operators some of the Enterprise sharesso as make them connected to the benefits of shareholders and take the equivalent risks.Therefore, the agent problems resulted from the separation between ownership andmanagement can be mitigated effectively. Since the equity incentive came into being,the state of development of equity incentive is in a fairly sophisticated time. As aneffective incentive mechanism, the results through which created have gained lots ofrecognition. More than90%companies have carried out the equity incentive planamong the companies listed in NASDAQ. In China, there is a compatible view on theimportance of the Management equity incentive. Equity Incentive ManagementMethods for Listed Company and Trial Measurements for Implementing EquityIncentive in State-holding Listed Company were published, which indicated that theformal equity incentive system began to be established in China. In recent years, Dueto the gradually matured environment and conditions in capital market, the system ofequity incentive is also developing rapidly in China, and adopted by a lot ofenterprises.In this paper, the fundamental types and characteristics of existing equityincentive are summarized through introducing and analyzing the Basic concepts ofequity incentive system. The actual condition of K CORPORATION LIMITED iscombined based on the principal-agent theory, human capital theory and residual claimtheory of the company to analyze the implementation environment of equity incentiveand the performance after implementation, and to design its related optimum project.K is a high and new tech Enterprise that is centered on human capital andtechnical capital, which has a particular representativeness. Besides, this company canalso be used for reference on the system of equity incentive to other related companies.

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Research on the Institutional Environment and the Corporate Governance of Urban Construction Investment Corporation

On 23/09/2013, in Agriculture, by rain

Urban construction Investment corporations are important organizational tools to maintain Economic growth, expand domestic demand and promote Social stability. In the development process, it is commonplace that they have established standard corporate governance structure. However, they usually don’t go in step with the structure practically, causing inconsistency between structure and activity. The scholars of New Institutionalism tried to explain the inconsistency phenomenon with the conflict between technical environments and institutional environments, but we found it doesn’t apply to the urban construction Investment corporations. Nevertheless, the corporate governance das not been involved in the present study on urban construction Investment corporations, and the study on governance of state-owned company is mainly in the fields of Economics and law, neglecting the external environment, it is lack of further exploration of practical logic and inner mechanism of governance.Based on the arrangement of the documents, the study in the article takes an urban construction investment corporation in Hezhou for case to analyze the interactive relationship between institutional environment and corporations and to explore the mmanent mechanism that why the practical activity deviate from the governance structure from the perspective of New Institutionalism. My study mainly found:1. Urban construction investment corporations in China confront complex nstitutional environments which can be divided into three parts:regulatory system, Social expectations, government role and its behavior patterns. The government plays:he role of leader in the establishment of the corporations and the inventor in the operations, and builds internal relationships with the corporations, so it affects the corporation’s operation deeply.2. All the elements of institutional environment have certain effects to the urban construction investment corporations. Both the regulatory system and the Social expectations require them to set up normative governance structure, but the governmen makes the actual corporate governance deviate from the governance structure an present such a condition that the board of shareholders and that of supervisors perfori practically no function, the board of directors misconduct and the managers ar responsible for the government rather than the corporations due to interfering th governance board. Various elements of the institutional environments have inconsisten requirements on corporate governance, and the corporations take obey strategy t answer these inconsistent requirements, they are not only obedient to the law an regulations, but also to the government, and then the loose coupling of governanc structure and operation has been caused:the corporations establish normativ governance structure, but the practical governance process isn’t entirely in accordanc with the structure, and it mainly operates under the interference of government.3. Owing to the unequal power relations between governments and corporation; urban construction investment corporations have to subject to the interference of th government in the current. So we should change the relations between governments an corporations, supplemented by improving the formal institution, to perfect th governance structure of urban construction investment corporations.4. Seeing from the theory of organization, in addition to the contradictor requirements between technical environments and institutional environments, th non-coordinate requirements to organizations from different institutional environmer system, is also the reason for the loose coupling of structure and operation c institutional organization.

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Empirical Study of China’s Listed Companies in Debt Management

On 23/09/2013, in Management, by rain

Now, more and more people are concerned about the Management of enterprises,especially through the issuance of stock to improve the level of corporate governance andoperating conditions of the phenomenon is increasingly common, but how to increase thedebt ratio to improve the operating conditions of the company is still relativelyless. Fromthe corporate financing and how to manage the Enterprise as the background, acombination of theoretical and empirical research approach, in-depth analysis on the foureffects of the introduction of the Debt Financing of China’s listed companies on corporategovernance. These four effects include dilution managers the right to the use of free cashflow, leverage effect of debt on firm performance effect of the threat of bankruptcy, thecreditor directly involved in the company. The validity of the theory and the currentsituation of the effect of the analysis of the above four claims governance of listedcompanies in China, pointed out the direction for the better Management companies.This article first look back to what the research results of the advanced countries ondebt Management, these results are summarized, and see that their analysis is divided intothree levels: first level is to choose what kind of ways to raise funds, the second level isthe financingagency theory; the third level is the introduction of debt financing, corporategovernance has no effect. Then analysis of our study, most of China’s analysis of why theintroduction of our debt financing does not work to improve the management of theenterprise.Then theoretical analysis on debt management, and summarizes the actual situationof China’s listed companies in this area, formulating hypotheses, an empirical testanalysis in accordance with reality. Balance the sampling rate, the debt ratio of currentassets, long-term asset-liability ratio and return on net assets regression analysis, theclassification of the asset-liability ratio of the turn samples were analyzed, the results didnot play a role in governance of listed companies in China claims.Finally, on the basis of the empirical test, the failure of the debt management to analyzeand put forward three suggestions. That China should fully protect the legitimate rights and interests of the creditors to change the status of the bank as a creditor, but also to draw someof the advanced practices of the country do better in this regard.