Corporate governance structures, corporate entrepreneurship and firm performance: a study of Chinese listed firms

Chen, X., 2019. Corporate governance structures, corporate entrepreneurship and firm performance: a study of Chinese listed firms. PhD, Nottingham Trent University.

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Abstract

Corporate governance plays two broad important roles of (i) stewardship and accountability role, that is, it is a mechanism designed to monitor managers and enhance performance of the firm; and (ii) entrepreneurship, that is, providing the mechanisms that motivate managers to create and sustain corporate competitiveness, thereby optimizing shareholders’ wealth. China, a country that does not align with the Anglo-American or stakeholder models of corporate governance (CG), but which is a major economic force in the transition economy. It is steadily moving away from centralised planning of its innovation system by the state to an increasingly open system involving technology outsourcing and imports, and foreign investors’ involvement makes it an interesting context to examine the relationship between CG structures, corporate entrepreneurship (CE) and firm performance. Consequently, this thesis aims to investigate the effects of CG structures and CE on firm performance among Chinese listed firms. Specifically, its objectives are to examine the relationship between (1) CG and CE; (2) CG and firm performance; (3) CE and firm performance; and (4) whether CG and CE interact to influence firm performance in the Chinese listed firms.

In addressing the research objectives, a multi-theoretical approach (i.e. agency, stewardship, and resource dependence theories) is used in this thesis to investigate the relationships between CG, CE and firm performance in Chinese listed firms. Several hypotheses were developed, and these are tested using panel regression models, in particular, the two-step system GMM. The panel analyses employ a data sample of 5,118 firm-year observations for Chinese listed firms covering the period 2007 – 2015. CG is operationalised using board and ownership structures; CE is measured using R&D intensity, patent applications and granted patents; and performance is measured using Tobin’s Q and return on assets (ROA).

Several findings are reported. First, R&D intensity is negatively related to managerial ownership, but positively related to board size and CEO duality. Second, patent applications have a negative relationship with state ownership, but positively related to foreign and managerial ownership, and supervisory board size. Third, granted patents exhibit a negative association with state ownership and board size, and positive association with managerial ownership. Fourth, firm performance as measured by Tobin’s Q is positively related to one person acting as both CEO and chairman measured by CEO duality, but negatively related to board size and supervisory board size. Fourth, when firm performance is measured by ROA, it is positively related to board size and managerial ownership, but negatively related to the proportion of independent directors. Fifth, Tobin’s Q is positively related to R&D intensity, but negatively related to patent applications. Firm performance measured by ROA is negatively related to R&D intensity, but insignificantly related to patent applications and granted patents. Finally, when firm performance is measured by Tobin’s Q, R&D intensity interacts significantly with board size and CEO duality. The results also show that board size, supervisory board size and CEO duality moderate the relationship between patent applications and Tobin’s Q. Further, the results show that supervisory board and granted patents interact mutually to influence Tobin’s Q. However, with the exception of CEO duality and patent applications, no CG variables are found to significantly moderate the linkage between R&D intensity, granted patents and ROA.

Taken together, this thesis first, extends the literature on the relationship between CG structures and CE in listed firms of a developing country with transitional economy and particular political and economic system. Second, impact of CG structures and CE on firm performance had also based on panel data. Third, this thesis provides the first evidence suggesting that CG structures and CE are complementary in how they impact on firm performance in the Chinese context. As the Chinese special two-tier board system and acceptance of non-state, foreign and managerial ownership are different from those in other countries, these empirical results had provided important managerial implications for the practice and are important for policy-makers seeking to improve CG in China.

Item Type: Thesis
Creators: Chen, X.
Date: February 2019
Rights: This work is the intellectual property of the author, Xihui Chen. You may copy up to 5% of this work for private study, or personal, non-commercial research. Any re-use of the information contained within this document should be fully referenced, quoting the author, title, university, degree level and pagination. Queries or requests for any other use, or if a more substantial copy is required, should be directed to the owner of the Intellectual Property Rights.
Divisions: Schools > Nottingham Business School
Depositing User: Jill Tomkinson
Date Added: 03 Apr 2019 10:42
Last Modified: 04 Jun 2019 09:45
URI: http://irep.ntu.ac.uk/id/eprint/36174

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