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On Corporate Governance and Investment Decision-making

Corporate governance theory is an important part of enterprise theory, and the supervision and checks and balances between company owners and operators require the establishment of a sound corporate governance structure. Similarly, in order to improve the effectiveness and scientificity of corporate decision-making, from the standpoint of stakeholders, the important role of corporate governance structure and mechanism is also emphasized. This paper first gives a brief overview of corporate governance, then analyzes the influence of corporate governance on investment decision-making, the present situation of corporate governance of listed companies in China and the problems existing in enterprise investment decision-making, and puts forward some suggestions for improvement.

I. Overview of corporate governance

Scholars have different views on the concept of corporate governance. Foreign scholars pay more attention to the division of connotation. 1988, Cochrane and Wodtke first put forward the definition of corporate governance. They believe that corporate governance problems come from the interaction of shareholders, board of directors, senior management and other stakeholders, and many specific problems arising therefrom belong to the category of corporate governance. Colin Meyer believes that with the development of market economy, the ownership and control of a company are gradually separated, which makes the company represent the interests of owners and investors, and the demand for corporate governance arises, from the executive supervision of the company's board of directors to the formulation of incentive plans for senior managers. The famous report of Cadbury's corporate governance reform in Britain —— Summary of Corporate Management Finance defines corporate governance as "the system of operating and controlling companies". Japanese scholar Toshio Sakura believes that the essence of corporate governance is a command and supervision system. Oliver hart pointed out in the article Corporate Governance Theory and Enlightenment that an organization's demand for corporate governance should meet two conditions, namely agency cost based on agency theory and incomplete contract.

China scholars pay more attention to the division of denotation. Professor Zhang 1996 regards corporate governance as an institutional arrangement, which can be divided into broad sense and narrow sense. Broadly speaking, corporate governance involves the legal and cultural aspects of corporate control rights and residual claims. In a narrow sense, corporate governance involves the functions of the board of directors, organizational structure, shareholders' rights and so on. Professor Wu Jinglian (1994) believes that the company owner entrusts the company and assets to the board of directors, and the daily operation of the company is taken care of by senior professional managers. The corporate governance structure forms a balance relationship, and the owner, the board of directors and senior managers restrict each other.

There are many views on the division of corporate governance model. The mainstream view is that it includes marketization and networking, that is, the Anglo-American model and the German-Japanese model. Recently, some scholars from different angles, joined the actual situation of various countries and regions to divide. Li Weian summarized the corporate governance practice in Southeast Asian countries and put forward the family corporate governance model. On this basis, Yang combined with the specific national conditions of China's economic transition period to supplement the transitional economic model. Hao Chen and Li Li focus on the perspective of human capital, and divide corporate governance models into shareholder-oriented, employee-oriented and bilateral governance models.

Second, the influence of corporate governance on investment decisions.

20 12165438+10. On 25th of October, China Institute of Corporate Governance of Nankai University released "20 12 China Corporate Governance Evaluation Report" and released 2012 China listed corporate governance index, which indicated that the corporate governance level of listed companies in China was on the rise as a whole. The indicators of shareholder governance have declined, and the promotion of shareholder governance has encountered bottlenecks; The board of directors and the board of supervisors have steadily improved the level and quality of governance, but the effectiveness of governance needs to be improved; Information disclosure shows a steady upward trend, but the level of non-financial information disclosure is low; The governance level of stakeholders has been greatly improved, and listed companies pay more attention to the fulfillment of social responsibilities; The incentive index of managers of private listed companies began to be higher than that of state-owned companies.

With the continuous advancement and development of corporate governance reform, scholars have also deepened the problem of how to optimize corporate governance. There are not only compulsory governance studies at the macro level of the country, but also studies on optimizing and perfecting corporate governance and its implementation effect at the micro level. Chen Deqiu and others take the data of listed companies in China from 2005 to 2007 as samples for empirical research. Based on investor relationship management, on the premise that corporate governance mechanism affects corporate behavior and corporate behavior leads to economic consequences, they theoretically analyze the relationship and mutual influence among corporate self-governance, investment behavior and stock behavior. The results show that there is a significant positive correlation between investor relationship management and stock returns, which is mainly realized by the intermediary variable of company investment behavior.

As an important part of self-governance of listed companies, investor relationship management can optimize the information allocation among investors, improve the transparency of company information, and ensure the initiative, timeliness and accuracy of information transmission and communication; Reasonable adoption of investors' good suggestions and correct investment decisions will help investors give full play to their right of supervision and suggestions, improve investors' trust in the company, improve the information efficiency of securities price formation, create company value more effectively, reduce information asymmetry, straighten out the logic and relationship between investors and listed companies, improve the effectiveness of supervision over listed companies and their management, and thus improve investment efficiency.

The influence of corporate governance on the risk of stock investment focuses on two aspects. The first is the impact on stock returns. The advantages and disadvantages of corporate governance are obviously manifested in the profitability and financial ability of the company, mainly in the willingness of investors to pay, the market value of the company and the excess return of stocks. The second is the impact on the stock price. Based on the data of listed companies in China, some scholars have come to the conclusion that the company's ownership structure has a great influence on the company's share price, especially on stock price synchronicity. Due to the high requirements of listed companies for information disclosure, it provides great possibilities for short-term investors in the capital market to increase their shares, which in turn has an impact on the volatility of the company's stock returns; Dual listing, board size, the proportion of independent directors, the degree of equity balance, the number of annual meetings between shareholders and the board of directors, and the shareholding ratio of management are significantly positively correlated with the stock price information content; Improving the level of corporate governance is conducive to reducing the heterogeneity of investors' beliefs and the investment risk of stocks; Reducing the heterogeneity of investors' beliefs is conducive to reducing the investment risk of stocks.

From the micro level, investor confidence reflects the quality of corporate governance to a certain extent, and further reflects the value of the company's stock. Investors are between companies and capital markets, and play a particularly important role in connection and transmission. The efficiency of corporate governance first affects investors' trust and confidence in the company, and then affects investors' expectations of the company and its stock price. This series of transmission functions further embodies the importance of corporate governance, indicating that there is a relationship between corporate governance and investment decision-making that cannot be ignored.

Under the modern enterprise system, the company's investment order is realized through the corporate governance structure of shareholders' meeting, board of directors and general manager. Specific investment decision-making rules and procedures will lead to the formation of specific investment order, which is closely related to corporate governance structure.

Three, the status quo of China's enterprise investment decision-making mechanism and improvement measures

In China enterprises, investment decision is not based on objective information, but largely depends on the personal experience and intuitive judgment of decision makers, lacking scientific decision-making methods. There are a series of problems such as investment decision-making mistakes made by enterprise decision-makers, incorrect investment decision-making caused by distorted accounting information, and chaotic investment decision-making procedures.

This requires enterprises to improve and perfect the investment decision-making mechanism. Specifically, the company owner designs a system through incentive combination to effectively audit and control the operators' business decision-making behaviors and results, so as to balance the conflict between long-term interests and short-term interests between shareholders and operators and improve the comprehensive quality of business decision-makers. Enterprises should establish scientific investment decision-making procedures, make investment decisions by analyzing the specific situation of enterprises, use scientific and effective decision-making methods, make reasonable judgments by combining scientific methods such as "economic added value" and "opportunity cost", pay attention to risk assessment, take into account current interests and long-term development, and harden the restraint mechanism of decision-making. We can learn from the excellent experience of corporate governance in developed countries and establish a clear internal control mechanism; Strictly separate the board of directors from professional managers and senior management, establish an independent director system, standardize and improve the board structure of the company; Attach importance to the important role of the board of supervisors, give full play to its supervisory function, improve the board of supervisors system, and comprehensively grasp investment decisions through pre-control, in-process control and post-control

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