Volume 17, Number 1, June 2022
| The effect of board characteristics and strategic model on financial performance and firm value-Taking the digital industry of Chinese listed companies as a sample |
Abstract
In recent years, there are many successful cases in the large-scale investment or transformation of many enterprises, also many failed cases. The highest decision-making department of these enterprises' major decisions is the board of directors, so the characteristics of board members are closely related to the decision-making of the company's business strategic model, but will the radical strategic model make the company develop rapidly and operate better? How should investors judge the value of the company and invest? Taking the digital industry of Chinese listed companies as a sample, this study makes a comprehensive empirical analysis on the relationship between the characteristics of board members and the degree of strategic radicalization by using the Ordinary Least Square (OLS) method, moreover, deeply discusses the relationship between the six aspects of the degree of strategic radicalization and the company's long-term and short-term financial performance and company value. The research findings are that the higher the directors’ remuneration and shareholding, the more the board of directors tend to choose an aggressive business strategy. However, the more aggressive the company’s strategy is, the more unfavorable it will be to the long-term financial performance. Investors make investment decisions only by the disclosure from companies, but, usually, the news that is good for now, is not good for the future. Finally, according to the empirical results, this paper puts forward corresponding suggestions to enterprises, investors and regulators.
Keywords: Corporate Governance; Strategy Model; Financial Performance; Corporate Value
JEL Classification: G32, M10