The purpose of this paper is to identify how internal corporate governance and external investor sentiment impacts the operating performance of the firm. The corporate governance mechanism affects the firm's operating activities, and transfers its results to outside investors by public financial reports. Since the universal uninformed investors could only identify the firm's net income instead of accrual earnings, this paper reflects the "visible" accounting number to represent investors'

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... ed information differently from literatures. Sampling the Taiwanese listed companies from 2007 to 2014, I demonstrate variable definition, build regression models and examine them by full sample analysis and by grouping analysis. The results show three points contributed to professional and business field. The first is that both the higher investor sentiment and the larger shareholding percentage of the board are relevant to reported performance. In addition, because the investor sentiment is encouraged by firm's net income, the managers should devote to better earnings for borrowing equity capital when the firm's debt ratio is high. Finally, only in the situation that the enterprise faces low investor sentiment and little shareholding of the board is the shareholding percentage negative relationship to the operating performance. It infers that instead of informing the firm's prospect to the outside investors, the board might hold on its share right inside of the firm.