Empirical analysis of low administration governance: Benefits and risks

摘要

This paper introduces in low administration governance index (LAC, 2005–2007) to measure it's benefits and risks. The OLS regression results indicate that LAC decreases year by year, which confirms the previous statement about governance transition; large companies tend to have higher LAC and take Boards as the main channel. Furthermore, the findings show that LAC has positive associations with the size of companies and the proportion of shares held by the biggest shareholder. Moreover, companies with higher LAC appear to perform worse in financial reporting and stock market performance, which supports the view of LAC-risk. The ratio of debt to total assets is positively associated with LAC, which confirms the LAC-benefit view about the preferential treatment. The total results show that low administration governance have dual impacts of on the performance of non-state owned companies.