Influence of Corporate Governance Structure on Listed Firms’ Investment Efficiency—A Case Study of Gree Electric Appliances

Abstract

With Chinese capital markets constantly developing and growing competition in the home appliances manufacturing sector every day, having a good corporate governance framework becomes an important force that drives listed companies’ investment efficiency and supports sustainable long-term development. Taking Gree Electric Appliances as the case, this study explores the impacts of concentrated ownership, board governance, and management incentives on inefficient investment. The study finds that Gree’s relatively concentrated ownership structure, well-functioning board system, standardized dual oversight mechanism, and clear decision-making process have effectively mitigated principal-agent problems. As a result, the company’s investments have been highly focused on its core business, rationally scaled, and rigorously evaluated. The proportion of core business investment remained high during 2022–2024, and the level of inefficient investment was significantly lower than the industry average. Efficient investment has further boosted financial performance: net profit margin continued to rise, and return on total assets consistently outperformed the industry average, forming a virtuous cycle of stable profitability and cash flow. This paper summarizes the internal logic between traditional governance mechanisms and corporate investment behaviour, and provides practical references for manufacturing and home appliance enterprises to optimize governance structure and standardize investment decisions.