Systematic Risk and Corporate Governance Risk - An Empirical Research of Chinese Listed Companies

In order to help investors predict and prevent risks rationally, this paper examines the relation between systematic risk and corporate governance risk of Chinese listed companies. In the theory aspect, the risk of governance mechanism consociation is proposed. Furthermore, we use panel data of 2001-2009 to analyze the relation between systematic risk and corporate governance risk. The empirical results verify that validation control of large shareholders significantly increases corporate governance risk. We also find the risk of governance mechanism consociation is the main source of governance risk, and the set up of Board and Supervisory Committee can efficiently reduce the risk of corporate governance.