Does Large State Shareholder Affect the Governance of Chinese Board of Directors?

摘要

In recent years, according to the American market, Chinese government has made several revolutions on the board of directors. “The introduction of independent directors” and “the separation of CEO and board chairman” are the most influential policies. These policies contain the same rules for firms with large state shareholder and firms with dispersed ownership. However, because of the existence of large state shareholder, Chinese board and its agency problem are different from those of American mature market. Does large state shareholder affect the governance of Chinese board of directors? Should these policies contain different rules for firms with large state shareholder and firms with dispersed ownership? This paper aims at understanding this problem with the panel data sample consisting of all listed A share companies, totally 3589 firm-year observations from 1999 to 2003. Our main empirical findings are: (1) The ownership structure significantly affects the relationship between CEO/Chairman duality and firm performance: for firms with dispersed ownership, “the separation of CEO and chairman” affects positively on firm performance; while for firms with large state shareholder, it affects negatively on firm performance. This shows that “the separation of CEO and chairman” is not suitable for every firm and that this policy should contain different rule for firms with different ownership structure. (2)The ownership structure does not affect the positive relationship between independent directors proportion and firm performance. No matter whether there is large state shareholder, the effect of independent directors proportion on firm performance is significantly positive. This result differs from the former domestic empirical result that independent directors proportion does not affect or negatively affect firm performance, showing that introducing independent directors does have proper effect. This result also differs from the foreign empirical result, reflecting the particularity of Chinese firms.