RESEARCH ON THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND FINANCIAL CRISIS OF LISTED COMPANIES

Even though most scholars acknowledge that weak Corporate Governance is the main reason of Financial Crisis. However, when it comes to a certain factor of Corporate Governance, controversial arises. In this paper, based on generalized concept of Corporate Governance, we reconstruct the Corporate Governance Index System in term of Decision-making mechanism, Monitoring Mechanism and Motivating Mechanism and integrate interest-related groups both inside and outside the company, according to which we define deputy indexes. Then we pick out 110 Chinese Listed Companies specially treated (ST and *ST) for the first time during 2006 and 2007 and their paired samples to testify the relationship between Corporate Governance and Financial Crisis. By Multiple Logistic Regression, we find indexes of financing mode, director board and supervisor board meeting, part-time director are positively related to the probability of Financial Crisis; while indexes of share type, share distribution, committees, education background of chairman, social responsibility, percentage of paid directors and supervisors, harmony with supervisory department, executives' pay, directors' stock and salary distribution between executives and senior managers are negatively related to the probability of Financial Crisis.