The Impact of Corporate governance on Corporate Performance — Evidence from China

Abstract

The goal of this research was to test the influence of corporate governance on the performance of listed companies on the Chinese stock exchange. The study methodology is based on a collection of data from the CSMAR from 2009 to 2018. A total of 2107 publicly traded companies are included in the analysis. Corporate Governance principles, such as board size, board independence, and shareholder activism, constitute the study's independent variable. The dependent variables for measuring corporate performance were ROA, EPS, and Tobin's Q. The research will cover two control variables to measure and evaluate the link between corporate governance on the performance. Multiple links between corporate governance and company performance have been discovered in this empirical investigation. First, the size of the board of executives has a favorable correlation with corporate performance in terms of ROA and EPS. Second, in terms of EPS and Tobin's Q, board independence is positively related to corporate performance. Third, according to EPS and Tobin's Q, shareholder activism has a positive link with the corporate performance. Moreover, advice for managers of these results also showed in this paper. All in all, corporate governance policies have an influence on a company's success, and the better the company's governmental structure is, the better the company performs.