Empirical Research on the Checks and Balances Relation among the Main Bodies of Governance Structure in Chinese Listed Companies

The paper selects 783 Chinese listed companies in 2005 as sample, and uses canonical correlation analysis to investigate the checks and balances relation among shareholders, creditors, board of directors, board of supervisors and managers. It finds that except for shareholders and managers, shareholders and board of directors have strong checks and balances relation; the relation among the rest bodies is all not strong. Creditors and board of supervisors, board of supervisors and managers even have very weak checks and balances relation. It demonstrates that the checks and balances relation among the main bodies of governance structure in Chinese listed companies is in a state of comparatively serious unbalance phenomenon at present. There is also dependent correlation between shareholders and board of directors, shareholders and managers, board of directors and board of supervisors, board of directors and managers. Therefore for these main bodies, we can indirectly change one main body´s governance situation by changing another´s governance situation. In addition, each governance variable plays different role while weighing the checks and balances relation, which should be paid different emphasis to some extent. The results have very important directive significance on how to improve listed companies´ governance level and restrain the governance scandals from appearing.