An Empirical Analysis of Directors’ Performance, Remuneration and Corporate Performance of Chinese Listed Companies

Abstract

In listed companies, directors (including independent directors and non-in dependent directors, etc.) are responsible for grasping the company’s development direction, deciding on major company matters, and supervising the management, so as to obtain certain remuneration from the company. Therefore, directors’ performance and remuneration in return for their performance will inevitably affect the corporate governance level of listed companies and thus affect performance of listed companies. This article takes the performance of directors of listed companies and the remuneration of directors as the entry point. From the perspectives of rights and obligations, this paper studies the relationship between the performance of directors, remuneration and company performance, in order to improve the governance level of directors of listed companies. Based on the data of Shenzhen and Shanghai A-share listed companies from 2005 to 2019, this paper analyzes the relationship between directors’ performance, remuneration and company performance of Chinese listed companies. The results show that directors’ meeting attendance is positively correlated with company performance; and there is no obvious correlation between directors’ negative opinions and company performance; directors’ remuneration is significantly positively correlated with company performance. The research in this article has positive enlightenment and reference for improving the directors’ governance of listed companies. Finally, based on the conclusions, several countermeasures and suggestions are proposed to improve the governance of directors: further clarify the responsibilities of directors to avoid confusion and overlap with management responsibilities; give full play to the supervisory function of directors to management, especially pay attention to the supervisory duties of non-independent directors or internal directors; the remuneration of directors should be more reasonable, and the remuneration should be determined according to the requirements and performance of directors’ duties; improve the evaluation and assessment mechanism of directors, pay more attention to the qualifications and ability of directors.