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Board Performance Research of Influential Factors

Author: HuFang¡¡ChenLiWen¡¡ChenFang From: www.yourpaper.net Posted: 2009-05-19 20:19:14 Read:
The content Abstract: the Board is used for to the a kind of economic institutional arrangements that is to solve the the the agency problem in the within the organization. Which bears the the basic responsibility of for provide recommendations to management and to regulatory the management the implementation of; the same time must be prevented from the the interests of the the a small shareholder of of the large embezzlement by a shareholders directs assets of the company damage. The board of directors can play its due role depends on the size of the board of directors, structure, more closely related to the behavior of the board of directors.
Keywords: effectiveness of the Board-scale structure of the Board of Directors Board of Directors behavior

The awareness of the of of existing research on the the performance of the Board boils down to two categories: the functions of the Board the the effect of played by that is, the performance of the Board; the the Board of Directors performance also include the the the results of of the Board as a whole and, the of the results of the the Board of Directors leaders (The chairman of the board and an Chairman of the Committee) and the the individual's performance of directors. The the specific content of relates to to the the assessment of the the the performance of of the the the Board of Directors's own, such as the oversight strategy plan-making process and to assist the the the effect of of the establishment and elucidating the of the company's strategic, supervision of operators results and financial results, and other, as well as the Evaluating of Contribution of of its the reasonableness of the and leaders of the of personal of their own structure. The board of directors can play its due role depends on the size of the board of directors, structure, more closely related to the behavior of the board of directors.

Board Size and Firm Performance Relationship


Of the of (a) of the The Board of Directors the scale of the the impact of of the is greater than that of on firm performance
Board likely to cause large-scale free-rider problem. Jensen (1993) and Lipton and Lorsch (1992) think that the, the the greater the size of the Board, the the the Board of Directors-on the of Directors are even more tend to is no longer frankly criticized the general manager of for the wrong practice required, or are no longer, on the the the the work of performance of the general manager of be carried out a forthright evaluation, this will enable the company to lose a lot of good investment opportunities. The Board of Directors In general, the large-scale of means that the external directors of large in scale, and while the but also risk-averse of the outside directors, and ultimately will cause the Company lack of innovation the ability to, which will greatly affect the the the improvement of of the corporate performance. Yermack (1996) the view that, directors of the external (such as a bank) is generally there are the the motivation to risk aversion, they are more concerned of the is the their own the reputation of. Once an investment fails or company closures, they will bear the high cost of loss of reputation. Obviously, the risk-averse outside board the company to give up a lot of the net present value is positive, but there is a certain risk of the project, thereby affecting the Company's operating performance (financial Yongxiang and Chapter, 2000).
Measure the expansion of the the scale of of With the the board of directors for, easily lead to the disorders of the its function, efficiency is low. Lipton and Lorsch (1992), the view that the, the-scale too of the Board of Directors the General Assembly led to the the difficulties of the of communication and coordination in the among the members of the the Board of Directors. Board to assume the functions of the major planning and decision-making, communication and coordination problems, will make a lot of good strategies and ideas understandable bias and non-adoption. They speculate that even if the monitoring capacity of the Board will be increased with the increase of the size of the board, but the resulting costs will exceed the benefits, for example, slow decision-making speed, notarized held less on management's performance the discussion of and so on.
Measure the expansion of the the scale of of With the the board of directors for, the Board of Directors more likely to be general manager of control. Alexander et al (1993) pointed out that the relatively larger board is more diverse, more prone to controversy and no cohesion. In the this case, the CEO through the some of the strategies in the the the in the the exchanges of the with the Board members to seize powers advantage, such as form an alliance, to provide there are selective channels of information, differentiation, and "conquer", and and so on on.

Of the the the impact of of the (b) of the-scale small of the Board of Directors on firm performance
Forced by to the the pressure of the market organization participants, the scale of the Board of Directors also there are a narrowing trend. Wu (2000) investigated the changes of the size of the board from 1991 to 1995. She found, showing a narrowing trend in this period the overall size of the board of directors, pressure from active investor may partly explain this phenomenon of downsizing, and that this shows that market participants think that the small size of the board of directors in overseeing manager layer better than the larger Board. Yermack (1996), Eisenberg, Sundgren and Wells (1998), Conyon and Peck (1998), Postma, van Ees and Sterken In (2003), the the of the research of the Loderer and Peyer (2002) confirms the the the Board of Directors the scale with the company of between the the operating performance reverse relationship, Huther (1997) proved positively related to the size of the board and the company's total variable costs (TVC), which means that a negative correlation between the size of the board and corporate performance.
Yongxiang Zhang Rong (2000) show that the smaller the size of the board, the better performance of the company; studies have shown that in the East-and pool Guohua (2004), there is a significant inverted U between board size and corporate performance of listed companies in China -shaped curve relationship, they think that the a suitable the board of directors of the scale of subject to a many other of factors related to affect the, such as the Board of Directors structure, a diversified operating conditions of of and and so on on, Therefore the a single standard may not be has a of any practical significance. The appropriate degree of the the number of directors of can be for the brings to the Board significant to discuss the the the expertise of that must be by the in matters decided to the for determining whether the implementation of Company is successful or not,, experience and ability to judge. , Qing (2007), Lai, Qu drawn relative to the in the the the East Chi-and the the pool Guohua (2004)-phase a similar conclusion, and further of the view that: When the the scale of the Board of Directors is expanded to the more than 11 people when, the the the Board of Directors the scale of to expand brought about by external critical resources effect is will be after the the to expand of the the Board of Directors any decline in the negative the impact of of may be in force from efficiency in the implementation offset.


Of the the relationship between study of of the the Board of Directors Structure and Enterprise Performance

(A) foreign scholars on the the of the research of the the board of directors to Structure and Performance of the relationship between
Some foreign scholars found in the empirical study, poor performance will make the company bring in more outside directors, and force inside directors leave; CEO approaching retirement, increased inside directors of the Company, and later tend to be the next CEO candidates; When the Company when the the of a product market is to give up, the board of directors of the external to enter, while the internal the Board of Directors to leave. Denis and Sarin (1999) found that dramatic changes in constitute by the Board of Directors occur mostly in the after the Company Performance deterioration is indicated or the before and after the of the of CEO a change of leadership, also found that the shareholding structure of the with the Board and structure There are obviously significant interactive relationship between, the change with the CEO Stock Ownership of the outside directors the proportion of changes in the proportion There was a is reverse related to. The recent Lehn, Patro and Zhao (2004) through research the 1935 ~ there is always in the inter-the year 2000 81 companies, found that the the Board of Directors the scale with the company of scale positive correlation, but and Growth Opportunities negative correlation.
(B) the of the research of the the domestic scholars on the the the board of directors to Structure and Performance of the relationship between
The aspects of of the domestic scholars also in the Board of Directors structure carried out certain amount of the research, the the Empirical class literature mainly analyzed the the proportion of division and and internal director of of the the two roles, proportion of independent directors affect the factors component and a performance the relationship between. FINANCIAL MANAGEMENT, Bai Jie and XI You-min (1998) analysis of 188 listed companies in China, found that the larger the company, the more inclined to take the unity of the two jobs. FINANCIAL MANAGEMENT (2002) A-share listed companies of Shanghai and Shenzhen Stock Exchange from 1997 to 1999 data found that the proportion of state-owned shares is positively correlated with two jobs-one.
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