Corporate Governance and Firm Performance - Evidence from Growth Enterprise Market in China

Corporate governance has been a topic of great interest to corporate practitioners and economists. Following trends of economic development and globalization, corporate governance has caught more managerial attentions to improve business efficiency and effectiveness. The purpose of this study is to investigate the relationship between corporate governance and firm performance with the newly growth enterprise market (GEM), and to demonstrate how effective corporate governance would impact firm performance in this market. Along this line of corporate governance, literature has documented empirical evidence mostly on publicly listed firms while few studies provided support for growth enterprises. By sampling 390 companies during the time period of 2009-14 in Chinese Growth Enterprise Market, this study finds that two factors of corporate governance, the shares owned by the board of supervisors and audit opinion, have significant positive influence on firm performance. On the other hand, the number of total shareholders indicates a significant negative impact on firm performance. Consequently, corporate governance would have a major impact on firm performance for growth enterprises, yet the relationship relies on the effect of specific operating variables.