Research on the Influence of Corporate Governance Structure on Corporate Financial Performance

Abstract

With the deepening of economic globalization, the topic of corporate governance has become a hot topic. Good corporate governance has a significant role in balancing the interests of all parties within the enterprise, and then improving the financial performance of enterprises. This paper studies the corporate governance data and financial data of a total of 4813 listed companies in China disclosed in the annual report of the listed companies and CSMAR database from 2015 to 2021 for seven consecutive years. The principal component analysis method is used to construct the corporate governance index, and the OLS multiple regression model is used to analyze the impact of corporate governance structure on corporate financial performance from three dimensions : ownership structure, board characteristics and management incentives. The study finds that ownership concentration, executive incentive and number of executives are significantly positively correlated with corporate financial performance. the board size and the proportion of independent directors are significantly negatively correlated with corporate financial performance ; the nature of equity, equity balance, and the proportion of female directors are not significantly correlated with corporate financial performance. The research results help investors to understand the development law and future trend of corporate financial performance through corporate governance structure, which is of great significance for enterprises to improve corporate governance structure and enhance financial performance. At the level of theoretical development, the conclusions of this study promote the academic research process in related fields.