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Listed Companies in China Problems and Countermeasures

Author: Li Yuan Nian From: www.yourpaper.net Posted: 2009-04-02 11:09:39 Read:
Abstract effectiveness of the governance of listed companies in China is directly related to the healthy development of enterprises, capital markets and the national economy as a whole. Concentration is too high, the shareholding structure of the irrational distribution of the capital market is not perfect, the target model of China's listed companies to explore and propose a solution from the perspective of internal and external governance of listed companies and the equity in the process of governance of listed companies in China recommendations.
The keywords listed companies corporate governance internal governance external governance

1 Listed Companies in China the main problems
China's economic reforms have so far only 20 years, the original planned economic system, there is only the task of the commitment plans division of roles commodity producers, sellers, but not truly modern sense of the legal entity with independent legal personality -. The basis of the market has led to the development of China's listed companies is an executive-led, multi-institutional co-exist in the historical process. In this process, the absence of a fully competitive market environment, autonomous corporate governance culture is basically not been formed. In the capital markets flooded with a large number of conversion from a joint stock limited company by the state-owned enterprises, most of these companies did not experience the specification stage of development of a limited liability company, but according to the intention of the authorities, in accordance with the requirements of the relevant laws and regulations in the organizational structure , property, business and other aspects to be rearranged to meet regulatory requirements for the target transformation into a joint stock limited company. The rise of private enterprises in recent years, although they are in the process of growing up is not an executive-led government, competition is relatively full, but their growth is the personal qualities of character or family business leaders work together closely linked to the Department. Once they enter the capital market, the original governance corporate culture and the corporate culture of governance rely on the system there will be conflict. Their ability to comply with the rules of the market and self-discipline, respect for the rights of other stakeholders may become a problem. So far, our company regulations are not perfect, the corporate governance structure and mechanisms are still far from being resolved. Therefore, corporate governance inevitably there are still many problems. In terms of equity, most of the shares of listed companies in China summed up in four salient features: First, the proportion of tradable shares is very low, most of the shares can not be traded; Two non-tradable shares is too concentrated, resulting in "due to the dominance ; outstanding shares are too scattered, too small proportion of institutional investors; largest shareholder is a holding company or country, is not a natural person.
Special course of development of China's listed companies, leading to a series of problems of governance of listed companies in China. This mainly includes the following aspects:
(1) The equity structure is irrational. Ownership concentration from the point of view, China's listed companies is highly concentrated, with state-owned listed companies tradable shares only about 35%, the largest shareholder is completely controlled by the company. Shareholding structure from the point of view, the dominant state-owned shares, administrative control is too strong a result of listed companies deviate from the maximization of corporate value.
(2) The rights of shareholders are missing. The dominant promoter shares in China's listed companies, state-owned shares and legal person shares can not flow. For the ordinary shares held by small shareholders, they are actually the things the company did not say, and the non-tradable shares account for absolute dominance makes hostile takeover may not exist.
(3) the internal governance of institutional failures. The two core functions of the Board include: oversee the company's long-term strategy and the appointment, evaluation and incentive senior management, board of directors who represent their interests and will of the constraints managers and major business activities have the final say. However, in the case of unreasonable structure of listed companies in China, as the the real bearer dedication by the staff at all levels of the national representatives of the shareholders are not, do not have the residual claim on the company, this mechanism obviously can not guarantee that the shareholders of supervision and incentive motivation, and ultimately the company into a managers internal control.
(4) the lack of a proxy contest and managers restraint mechanisms. , Mostly belonging to the state-owned shares in listed companies in China are dominant natural blocked from the outside proxy contest, the staff of the national representatives of the shareholders is neither residual claimants non-risk takers, so it may avail themselves of the right to choose can operators to maximize their own interests, rent-seeking competition in the power of attorney. China's mostly state-controlled listed company managers to take the government appointments of managers, on the one hand potential competitors little threat to the incumbent managers, on the other hand, the internal control of the phenomenon makes the external constraint on the manager's control small. The two aspects of constraint mechanism failure actual risk eventually transferred to government departments, resulting in higher agency costs.
(5) lack of external market mechanisms. China's listed companies of non-tradable shares to dominate, blocking the possibility of a change of control occurs through the stock market, and weaken the capital market to optimize the resource allocation function.
2 Listed Companies in China target mode
An ideal model of governance of listed companies should be included in the company's internal system of governance, governance system and market system of governance. The same time, from the point of view of the overall operation of the corporate governance of a country's political, economic, historical, cultural environment, the corporate governance of the country also has a significant impact.
Internal governance should have a few basic elements: The company is built on the basis of ownership and control reunification and the right to operate the phase separation; a shareholders - shareholders' meeting - Board of Directors - Manager orderly operation of the internal governance institutions, namely the shareholders constraints of the Board of Directors by the shareholders in a general meeting, the interests and will of the board of directors on behalf of shareholders constraints managerial staff, and significant business activities of the Company have the final say, the managerial meet the interests of the shareholders on the basis of day-to-day operating decisions; addition, weakening the rights of the shareholders' meeting, the Board of Supervisors the case is very important, it represents the shareholders to exercise oversight functions of the Board and the management.
Governance mainly refers to the listed companies to build a sound legal system, LaPorta et al study found that a country's legal system has an important influence on its corporate governance and ownership concentration of a country's degree of legal protection for investors and their listed companies negative correlation, the value of its listed companies is related to its level of development of the capital markets is.
Market governance system includes a fully competitive product markets and manager market and the capital market. Fully competitive market can accurately reflect the level of performance of managers in a way to overcome the problem of separation of ownership and management conditions of asymmetric information. The presence of a competitive market manager managers can flow freely between different positions in different companies or departments according to their own conditions, their positions determined by the market. Perfect capital markets, including shareholder voting mechanism, mergers and acquisitions takeover mechanism and equity incentives. If the poor performance of the company, the shareholders can "hand vote" to exercise their rights in order to improve the operating conditions. If the shareholders choose to "vote with their feet", the mergers and acquisitions take over possible. Stock incentives for capital markets play one of the ways of the corporate governance function, is conducive to the capital market to play on the company's incentive role of supervision and restraint. Associated with more than a few seen in Figure 1.
The
basic idea 3 of listed companies in China's internal governance improvements
Internal mechanism generally includes four aspects: the Board of Directors, executives Remuneration, shareholding structure and financial information disclosure and transparency.
Board self-evaluation system, strengthen the strategic management functions and responsibilities of the Board of Directors. Including the rationalization of investment decision-making and decision-making procedures to promote and oversee the internal operational aspects of the system (the rules of the game) and organizational building, so these aspects of operational procedures, transparency, rationalization, to promote the institutionalization of internal control mechanisms, rationalization and so on.
The second mechanism to ensure that the management goal of maximizing shareholders' interests is a reasonable salary. Due to the presence of asymmetric information and incomplete contract, the operators of modern companies, if not enjoy the company of "residual claim, can also be part of the natural control of business activities. Therefore, the conditions of the separation of ownership and management of modern AG, internal control is inevitable. For listed companies in China have to do is minimize the opportunistic behavior of insiders, good managers distribution of benefits, and the establishment of market-oriented, dynamic, long-term incentives. Incentives to break the limitations of state-owned enterprises income distribution, improve the income standard for managers outside, the most important by giving management the stock or stock options, incentive stock options to its own interests and the interests of the shareholders of the Company linked, linked to long-term development of enterprises.
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