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The Empirical Study on the Influence to the Quality of Information Disclosure by Corporate Governance Mechanism in Chinese Listed Banks

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

The problems of corporate governance and information disclosure are veryimportant in the modern enterprise and academic research. There are lots of researchabout the problem of corporate governance and information disclosure separately indomestic and in abroad, but there are less studies about combining them and making theexploration of the interaction relationship between them. Speaking of the research area,the most research pays attention to the common enterprise, whitch makes the conclusionwhether it is suitable the financial profession, specially the commercial bank is worthdiscussing.Commercial bank is a kind of special company including the commonuniversality and particularity. Banking market is a typical market of informationasymmetry, so the question of information disclosure always makes bigger effects in thebank industry than to other industries. Especially the banking industry developmenthistory is short in our country, and the supporting system and related laws have not beenperfect, the quality of financial information has many deficiencies, and after the2007,9banks have been successfully listed A shares, there will be more and more listed banksin the future, which will lead people to pay more attention to the quality of informationdisclosure in banks, especially in the listed banks.Due to corporate governance and information disclosure system are based on theprincipal-agent problems, as the two core system in the modern enterprise system, theyare mutual influence and mutual restrict. The mechanism of corporate governance effecton the quality of information disclosure is characterized by the following: in theprincipal-agent relationship to establish a series of institutional arrangements, namelythe effective company management mechanism, to provide protection for the highquality of the information disclosure system. Many scholars in domestic and abroadhave made the conclusion that the corporate governance structure has importantinfluence on the quality of financial information disclosure with the theoretical analysisand the empirical analysis. Specific to the listed bank, by improving corporategovernance mechanisms to improve the quality of information disclosure of listed bankis feasible and practical significance.Through collecting the data of listed state-owned large-scale joint-stockcommercial banks and other listed bank, this paper makes the research about therelationship between corporate governance and information disclosure quality with empirical analysis in banks. Empirical study shows that, the conclusion of generalcorporate governance research is not suitable for the banking industry. The internalcontrol mechanism in China Listed Commercial Banks has a little effect on accountinginformation disclosure quality, only found in the separation of the two leadershipstructure and the dispersed ownership structure can improve the quality of accountinginformation disclosure, while the board of directors, creditors and managers incentivecontract has no effect on the quality of accounting information disclosure. The statisticalresults about the product market intense competition after constraint control on thecorporate governance mechanism to form show that for the imperfect internalgovernance of listed banks in China, product market intense competition will furtherreduce the improvement of accounting information disclosure by quality internal controlmechanism.Finally, according to the existed reseach and the results of empirical research, thispaper puts forward proposals from the improvement of corporate governance in bankingsystem and the promotion of banking information disclosure quality. To encourage thereduction of state-owned stocks, optimizing banking equity structure, give full play tothe role of independent directors, truly bank chairman general manager two ministry,establish and perfect the system of audit committee, strengthen the external supervisionstrength, perfect the market mechanism of legislation, promotion of informationintermediary industry development. And to encourage banks voluntary disclosure ofinformation of listed companies, standardize company report process, guiding investorsto establish the correct investment concept, foster competition in product marketsystem.

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AH Shares Cross-listed on Empirical Research on the Impact of Corporate Governance and Firm Value

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

With the development of financial globalization, more and more Chinese companiesto enter the international equity markets for financing. At the same time, China’s rapideconomic development and the rapid expansion of the mainland stock market in recentyears has attracted many overseas listed Chinese companies return to the domestic market,cross-listing as an increasingly important corporate strategies have been developed tobecome China’s securities market development in a remarkable phenomenon. Studycross-listing on corporate governance and firm value have important practicalsignificance.Draw on relevant research results on the basis of the special institutional backgroundof China’s securities market and the characteristics of cross-listed companies to study thecross-listing of the AH can have an impact on corporate governance and firm value, andwhether the corporate governance the companies value the relationship.2007-2009ChinaAH shares cross-listed companies as our sample, and select only the territory of theissuance of A shares of similar companies as paired samples for comparative analysis, theuse of descriptive statistics, independent samples T-test, nonparametric tests, principalcomponent analysis, regression analysis, the following conclusions:①In the area ofcorporate governance, the results of the univariate test is part of the corporate governanceof cross-listing of AH index was significantly better than the similar ratio of the company,using principal component analysis method to get the two groups of the company’scorporate governance indicators, AH the company’s composite score was significantlyhigher than the ratio of cross-listing to significantly improve the level of corporategovernance.②in the value of the company, the value of the AH-share companies andthe ratio of the company no significant differences.③cross-listing on the relationshipbetween corporate governance and firm value has a positive regulatory role, but thisregulation is not significant.In accordance with the conclusions of the theoretical and empirical analysis, andfinally this paper, the corresponding recommendations to investors, the management oflisted companies and government agencies.

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Research on the Correlation of Institutional Investors and Research and Development of Listed Companies

On 21/09/2013, in Management, by rain

With the rise of the stake of institutional investors, the relaxation of governmentcontrol and actively promoting, the institutional investors of the United States, Britainand other western countries have gradually given up the past and passive means of”vote with their feet”, beginning to use the positive mode of “voting with the hand”.The rising of shareholder activism of institutional investors attracts the attention ofscholars at home and abroad. In addition, the research and development activities arenot only the impetus of enterprise survival and development, but also an importantfactor for investors to predict the prospects of business development. Therefore, theR&D input will become a topic of concern to institutional investors.Based on Institutional shareholder activism theory and principal-agent theory,this thesis explores the institutional investors to exercise positive power. Furthermore,this thesis studies the necessity of influence of institutional investors to R&D inputfrom two aspects of the cause and the mode of action. Finally, it probes into therelationship between institutional investors and R&D input of listed companies. In theempirical test part, the thesis chooses the2007-2010of China’s domestic A-sharelisted companies which was injected by institutional investors as a sample. Then,using the holding ratio of overall institutional investors, the holding ratio of differenttypes of institutional investors and R&D intensity as explanatory variables, weexamines the relationship between institutional investors and R&D of listedcompanies. The study shows that China’s institutional investors can urge listedcompanies to increase R&D input, while different types of institutional investors varyin their influence to R&D input of listed companies. In addition, the listed companiesto increase R&D input will attract some institutional investors to increase their stake.This indicates that the development of institutional investors in China is not yetbalanced, which need to continue reform and improve.Finally, according to the findings, this thesis gives some advices:(1)Develop theinstitution investors vigorously and optimize the structure of institutional investors;(2)Relax appropriately or remove related laws and regulations of institutional investorsto participate in corporate governance;(3)Increase R&D input of listed companies andmake a win-win situation between listed companies and institutional investors.

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Empirical Study on QFⅡ and Corporate Performance of the Listed Companies in China

On 21/09/2013, in Finance, by rain

With the developing of economic globalization, opening the capital markets has become aninevitable trend. As a limited control of opening the domestic capital markets to foreign investors,the QFⅡ system not only can avoid the loss of the opportunity to attract international capital dueto the closure of the domestic capital markets, but also can increase the utilization of foreigninvestment, reduce the impacts of short-term profit-driven capital on the capital markets,stabilize the exchange rate, and promote the healthy development of capital markets. China hasput the QFⅡ system into practice for nearly ten years. As the increase of the investment, QFⅡbecomes more and more active in Chinese capital markets. With the extensive managementexperience, professional team of financing and scientific strategies of investment, QFⅡ’s hasplayed an important role in improving the corporate governance and the performance ofcompanies.In this paper, the author firstly reviews the researches of predecessors on the relationshipbetween institutional investors and corporate performance and the QFⅡ system in China. In thisbasis, the author points out the defects of those researches and put forward author’s opinion.Then, the author introduces some basic theories about Corporate Governance. Next, the authorintroduces the definition and the development of QFⅡ system and analysis the motivation andthe ways of which the QFⅡ affects the Corporate Governance. In the empirical analysis, theauthor tests the relationship between QFⅡ and the corporate performance with the panel data ofthe companies which listed in Shanghai stock exchange and Shenzhen stock exchange from2005to2010. According to the results, in china’s A share market, the lagged1phase share of QFⅡ ispositive related with the companies’ performance. The results show that, QFⅡ can improve thecorporate governance through holding share, and than improve the companies’ performance. Atlast, the author suggests that Chinese’s government should improve the quality of listedcompanies and guide QFⅡ to take part in corporate governance.

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In the Perspective of Corporate Governance of Listed Company Inner Control System

On 21/09/2013, in Management, by rain

CITIC Securities company limited as one of the large-scale comprehensive typeof securities companies, the company has been in the area of internal control haveachieved good results, but from a realistic point of the company is still there weresome inadequacies.Analysis of the internal control through this article on CITIC Securities, had anin-depth discussion on the theory of internal control and corporate governance, aimedat using modern control theory, to build more sophisticated and effective internalcontrol system, promoting the full implementation of the risk managementframework.And from perfect company governance environment, and construction full ofinternal control organization and implementation system, and perfect control process,and for risk assessment, and established internal monitoring and supervisionassessment, and implementation internal audit and evaluation, angle, by soundorganization structure and perfect rules and regulations, strengthening riskconsciousness and specification business concept, developed strictly of practice forand business process, strengthening implementation and supervision assessmentmechanism, measures, discussion internal control mechanism effective run of path.CITIC Securities to strengthen the internal control and risk management, withsome actual significance applications.

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A Study on the Influence of Corporate Governance in Chinese Listed Companies on Earnings Management

On 21/09/2013, in Management, by rain

Earnings management is behavior of corporate to increase or reduce the accounting earnings within the framework of generally accepted accounting principles, but this behavior which the manager made the adjustment to the financial data based on their own interests or the corporate value maximization. It is obviously contrary to the neutrality and fairness of the accounting information. In recent years, earnings management of listed company is growing, its means and form became more varied and covert. The phenomenon of earnings management led to a distortion of stock market information. It is not only reduces the efficiency of resource allocation, but also seriously affected the health and long-term development of China’s capital market.This paper explored the connotation and the causes of earnings management, which were also two aspects as a breakthrough point of the paper. It discovered that, administered authority as the main body of the earnings management utilized the freedom of accounting policy to management the financial data when corporate governance mechanisms were inadequate. Therefore, to restrain the behavior of earnings management, it must solve the problem of imperfect corporate governance structure in the modern corporate system. This paper put forward seven hypotheses based on the theory of interaction between corporate structure and earnings management and the current situation of corporate structure as well as the resulting problems of earnings management. The paper chose1386A-share companies listed in Shanghai and Shenzhen Stock Exchange in2010as the research sample, and applied multiple linear regression to do empirical analysis of relations between earning management and corporate governance from four levels:ownership structure, the characteristics of board of directors, board of supervisors, and management’s feature.Empirical Analysis of results showed that the percentage of share that the largest shareholder held has a U shape relationship with earnings management; the level of earnings management in the state-controlled listed companies is higher than in other equity nature of listed companies; the scale of board of directors and the proportion of independent directors is negatively related to earnings management; there is no significant correlation between earnings management and the frequency of board of supervisors’meetings, the share proportion of manager as well as the general manager and the board chairman is the same one.Therefore, in order to fundamentally restrict the listed company’s behavior of earnings management, it must improve their corporate governance structure first. In the conclusion part of the paper, it put forward three suggestions to optimize the governance structure:optimize the equity structure, strengthening the role of board of directors, clear the board of supervisors’responsibilities, and sound internal incentive system.

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Studies on the Inequality Income in State-owned Monopoly Enterprises

On 21/09/2013, in International, by rain

After China’s reform and opening up more than30years, the per capita income of the residents in our country increases dramatically and living standards have improved significantly. However, with the growth of the national economy, unfair wealth distribution in different social groups gradually highlights, which has become the focus of attention, especially the day price salary of some state-owned monopoly executives causes social public widely query and resentment.The domestic existing literature research the problem of high income in state-owned monopoly industries from the observed data of industry income distribution gap. They point out that it’s the administrative monopoly leading to state-owned monopoly industry high income. This paper aims to the internal unfair distribution problems of state-owned monopoly enterprise, which part of the monopoly executive’s high income. We believe that high profit doesn’t mean higher income, which needs some “catalyst”. The “catalyst” is the deformity of the corporate governance structure.This paper will apply corporate governance theory to analyze the unfair income distribution in our country state-owned monopoly enterprise, and decompose the dangers of deformed company structure hidden in the back of income gap phenomena. The ineffective “separation of structure of board of directors, board of supervisors, and executive causes the executive and board (executive) behavior lack of effective supervision and restraint, and form management interest group with the increasing serious problems of insider control, which eventually led to the state-owned asset returns possessed and divided up by minorities, violating the social justice and that all the people and the country as state-owned enterprise owners shall enjoy the state-owned capital of remuneration.First of all, the paper reviews the relevant articles and researches on state-owned monopoly enterprises income distribution, which introduces the point of view of the researchers dug into the income distribution in state-owned monopoly enterprises, and finally gives the perspective view of this paper—-corporate governance, and then summarize the management theory. After that, the paper analyses the current situation of unfair income distribution in state-owned monopoly enterprise, which can be describe in two aspects:in one hand, the dividend ratio given to the country of the state-owned monopoly enterprises is too low; on the other internal worker income gap in state-owned monopoly enterprise is too large.Secondly, based on the analysis framework of governance theory, this paper researches the causes of the state-owned monopoly enterprise unfair distribution. The specific reason perform in five aspects:First, it is lack of property right constraints within the income distribution system of the state-owned monopoly enterprises; Second, the independent distribution permissions of the manager is too large, lacking of supervision and restraint mechanism; Third, insider control question is serious, forming management interest groups; Fourth, the incentive mechanism is improper, performance incentives evolving into “dividend incentives”; Fifth, the government to a monopoly of the income distribution regulation is slack. In short, the company governance mechanism is closely related with the income distribution, good corporate governance mechanism can promote the realization of the fair income distribution. However, due to the imperfect internal and external governance mechanism of the state-owned monopoly enterprise, the manager lack of effective market supervision and restraint, even collude with government officials, board of directors and board of supervisors, forming management interest group. They actually control the distribution system and distort income distribution system, adding to state-owned monopoly enterprise income inequality.Finally, the paper proposes the reform suggestions to solve state-owned monopoly enterprise unfair income distribution problems with perfecting enterprise internal and external supervision and restraint mechanism, as well as improving the enterprise internal incentive mechanism. The core of company governance lies in establishing mechanism that the board of directors, supervisors and executives balance each other by the ways of supervision and restraint, the function failure of any party can cause two other party power expansions, which may infringe upon the interests of the shareholders and stakeholders. In view of the state-owned monopoly company belongs to all people, so it is significant to improve the enterprise internal and external supervision and restraint mechanism in order to counter a few powers of the insiders and safeguard the public interest of the whole society. In addition, undeserved incentive mechanism will seriously influence the constraint mechanism function, thus it is imminent to improve the state-owned enterprise internal incentive mechanism. When regulating and improving the enterprise operator’s salary system, a scientific incentive mechanism shall also promote the rationalization of enterprise internal distribution system simultaneously, and narrow income gap between the operators and ordinary workers, alleviating the enterprise internal unfair distribution conflict.

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Impact of Corporate Governance on Commercial Banks’ Risk-taking in China

On 20/09/2013, in Finance, by rain

Basel Committee on Banking Supervision and Administration Commission has issued more than one paper to emphasize on the importance of sound corporate governance mechanism for enhancing the ability of commercial banks to guard against risk; the role of sound corporate governance to reduce commercial banks’risk is also reflected in “Basel Ⅱ”; the subprime mortgage crisis mercilessly expose all the shortcomings and deficiencies of the corporate governance in the U.S. banking sector. Corporate governance’s significant impact on commercial banks’ risk-taking has already become the consensus of the community. With the continuous development and further opening degree of China’s financial market, China’s commercial banks are facing more and more diverse risk. In this context a clear understanding of the relationship between the corporate governance and commercial banks’ risk-taking in China is very important for improving the corporate governance of China’s commercial banks and helping banks to guard against the risk they face.This article firstly selects six representative banks from the listed commercial banks in China; and analyzes the status and characteristics of commercial banks’ corporate governance in China from the aspects of ownership concentration, shareholding property, Board Governance, Supervisory Board governance and incentive mechanism. Secondly, author theoretically analyzes the impact of ownership structure, supervision mechanism and incentive mechanism on commercial banks’ risk-taking in China. Finally, author empirically tests the impact of corporate governance on sample banks’ risk-taking based on the data of listed banks. Based on the theoretical analyze and empirical test, combined the status and characteristics of commercial banks’ corporate governance in China, this paper draws following main conclusions:(1)highly concentrated ownership structure has a positive impact on commercial banks’ risk-taking in China;(2)excessive state ownership has a negative impact on commercial banks’ risk-taking in China;(3)the size of Board has no significant effect on commercial banks’ risk-taking in China;(4)the introduction of independent directors has a positive impact on commercial banks’ risk-taking in China;(5)the increasing scale of Supervisory Board has a negative impact on commercial banks’risk-taking in China;(6)the introduction of external supervisors has a negative impact on commercial banks’risk-taking in China;(7)current remuneration incentive mechanism has a negative impact on commercial banks’ risk-taking in China.

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Research on the Relationship between External Governance Environment and Earnings Management of Listed Companies

On 20/09/2013, in Management, by rain

Accounting information of listed companies is an important basis for investor, the quality of accounting information disclosure determines whether the capital market development is healthy. Chinese capital market is in a special period which called “emerging and transition”, the external governance environment is not very perfect. In recent years, the earnings management is come out after other. The earnings management damages benefit of the investor and finally impact on the effective allocation of resources. Earnings management has been a hot issue in finance research area. Therefore constraint earnings management is very urgent.In China, the unbalanced regional development existing in the process of economic growth has exerted a major influence over earnings management and governance of listed companies. From the perspective of external governance environment, applying data of836companies listed on Shanghai and Shenzhen Exchange from2003to2009, this paper reveals the regional distribution characteristic and law of earnings management, verifies the effect of external governance environment in different regions on earnings management, and studies the role of substitution and protection played by corporate governance in poor external governance environment by OLS regression.The research shows (1) from the perspective of economic geography, it can be found that there exists a remarkable phenomenon of local spatial cluster in external governance environment and earnings management of listed companies, whose distribution characteristics conform to some regularity, of various regions in China, namely, facing the most favorable external governance environment, companies in east China have the lowest degree of earnings management; companies in west China are confronted with the worst external governance environment and their degree of earnings management is highest in three regions; companies in central China are intermediate in both external governance environment and degree of earnings management;(2) earnings management of listed companies is affected by external governance environment, which means companies in region with higher marketization degree, less government interference and more perfect law environment have a lower degree of earnings management;(3) the differences of corporate governance may significantly influence the relation between external governance environment and earnings management, to wit, the improvement of corporate governance can effectively reduce the negative effect of external governance environment on earnings management.

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The Research of Internal Control on the Basis of Corporate Governance

On 19/09/2013, in Management, by rain

Internal control is one of the most important mechanisms of delivering accountability on fulfilling effective corporate governance. All organizations need a sound and effective system of internal control. However, recently occurred big corporate scandals like Enron, Guangxia and even Olympus which concealed its huge financial losses for nearly twenty years all suggest a breakdown in internal controls and the lack of adequate corporate governance mechanisms. Modern enterprises in operation tend to obscure the problem, or just fill the loopholes, and attempt to sneak it in, which will eventually bother to go and face the risk of failure in the voice of public condemnation. The cause of financial scandals is not only due to the deficiency of internal control, but also the problems of corporate governance. A confused corporate governance structure and governing board vacancy lead to the ineffectiveness of internal control mechanism. Therefore, it is necessary to figure out the intrinsic relationship between corporate governance and internal control, find out the deficiency which exists in their operation and establish a sound internal control system, only by this means can the enterprise build to the last.The scholars used to separately research on corporate governance and internal control and very little involve regarding the connection between them. So, what is the relationship between corporate governance and internal control? What are the problems of them operate in the market and how to make an improvement? How to design a sound internal control system based on the corporate governance perspec‐tive with the aim of improving business efficiency and management level?This paper first selects the theories of corporate governance and internal control as breakthrough point, analyses the connection and difference between them and then rationalizes their relationship, which followed by researching the status quo of corporate governance level and internal control mechanism in our country. On the basis of all above, it finally tries to construct a COSO‐like style internal control system on the corporate governance perspective, in this way it can achieve the objective of improving the company effectiveness in the market.