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Choices of model of corporate governance in China

Author: YuZhiFang¡¡XiaoYao From: www.yourpaper.net Posted: 2009-10-07 12:16:17 Read:
[Abstract] model of corporate governance has been a key topic of concern by the international community, whether in legal circles and in economic circles, with the choice model of corporate governance has become increasingly fierce competition between the further deepening of economic globalization, the company companies to increase the international competitiveness of one country, the source of our company in selecting governance model, not only need to learn from the advanced experience of the current mode of the mainstream of the international community, must also be unique to our country's economic development path, cultural traditions, as well as our corporate governance structure Features adapt combining.
[Keywords] corporate governance; Anglo-American model of corporate governance; model of corporate governance in Japan, Germany; Revelation of
[The CLC] D922.291.91; F270 [Document code] A [Article ID] 1006-5024 (2008) 11-0177-03
[Author Profile] Yu-Chih square, East China Institute of Technology, the University Law School professor, research direction for the Commercial Law; (Fuzhou, Jiangxi 344000)
Xiao Yao, Southwest University of Political Science and Civil and Commercial Law School graduate, research direction for the People and the Law. (Chongqing 400031)

Speaking from the perspective of the Law, the corporate governance structure is to safeguard shareholders, creditors of the company, as well as social and public interests, and to ensure the normal efficient operation of the distribution of power between the company concerned organizations required by law and the Articles of Association of the Company and the system of checks and balances. Corporate governance structure involves the major issues of the ability to achieve and normal operation of the company's shareholders as well as the interests of stakeholders, and have a vital role in the economic health of the company and the community as a whole.
Explore suitable to China due to the different law, philosophy, history, tradition and cultural background, political system and social environment, the specific mode of the nation's corporate governance structure have their own characteristics, the author will have a representative model of corporate governance Introduction and Commentary learn from the excellent system.

Governance Patterns of Anglo-American market control

Of the Dutch scholar Jie Erte Hofstede Ted Culture Index, individualistic culture of the Anglo-American countries, the social structure is loose, it is the pursuit of equality, easily accepted by different factors, a focus on the accomplishment, and material success society, is the birthplace of individualism and liberalism. reflected in the field of corporate governance, in this social context, the concept of equity-oriented governance, with its economic system, and gradually form a market-driven company governance model.
The model suggests that the core of corporate governance is to protect the interests of the shareholders, the shareholders in corporate governance in a dominant position. Actually implement the corporate governance structure is a single layer of the committee system, wherein the company's equity with a high degree of dispersion and fluidity , emphasized in this mode, the company set up only the shareholders' meeting and the board of directors. divided by shareholders for the company's authority, exercise decision-making power of the major matters of the Company board of directors elected by the shareholders, the company's senior management to improve efficiency in the flow of capital. personnel appointed by the board of directors, the company usually does not set up a special Board of Supervisors.
1. Ownership structure and corporate governance
Berle and Cummings 1932 "modern company with private property rights" of the nation's largest 200 companies in the early 1930s, empirical analysis, that with the increase in the number of shareholders of the Company, the company expanded, increasingly fragmented equity control of the shareholders of the company's property operations more difficult. ownership and control of the modern company growing separation of control has increasingly transferred to the hands of the company's operating. they believe in the separation of ownership and control of the company mode under, between managers and shareholders of the company to produce a natural conflict of interest, a business owner in the case of asymmetric information management company gives operators, the company operating as a rational economic man "in the pursuit of their own the goal of maximizing utility or benefits under action, so that when the conflict of their interests with shareholders or the interests of the company, the operator may set the shareholders or the company for its own interests, the interests of the expense. to avoid operators such action, it must be action to monitor, to pay a variety of "agency costs".
In this mode, the dispersion of the equity share of stock owned by minority shareholders is very small, you can not actively spend time and money to collect the information, supervising operators, but expect others to supervision, their own income, neither the competence nor the minority shareholders No incentive to participate in corporate governance if the majority of shareholders to do so, there will be no one to supervise, so that minority shareholders in corporate governance, in particular the role of the internal control mechanisms are very weak.
2. Settings of the board of directors and corporate governance
"System" - "single tier board structure" market-controlled model of corporate governance, the Anglo-American countries, that set up a board of the general meeting, only to set up a board of directors, play a decisive role is the manager of the company, The board of directors does not have enough influence supervision and control manager for the implementation of the rights within the company to set up special committees (Audit Committee, Remuneration Committee and Nomination Committee), the oversight of the executive powers of the Board of Directors Business in contemporary Anglo-American practice, The two main functions of the Board of Directors of the Company to implement the management and supervision of management here does not refer to the day-to-day management of the company's business, but rather refers to the strategic management, corporate strategy, and through effective strategy formulation, implementation, control and changes in the adjustment process to deal with the external environment.
In addition, the Board has also established a system of independent directors. Dispersed because the Anglo-American company's equity, resulting in a serious internal control problems, the independent director system it is set up to solve this problem. Aims to hope by the Board appropriate external and internal institutions and the introduction of external independent directors formed on the internal human supervision and control forces. U.S. Securities and Exchange Commission defines independent directors as outside directors and the company does not have an important relationship, is not serving non-executive directors. they has unique expertise in certain areas, is a senior expert of a field of audit committee composed of independent directors, the Remuneration Committee and the Nomination Committee can be more objective to provide recommendations required by the operating decisions and to exercise oversight functions, is conducive to the company's internal management improvement of the control and supervision of the company's management play an important role.
Incentives set corporate governance
In order to solve the principal - agent problem, the company effective incentive mechanism is an important part of corporate governance in the Anglo-American model, incentives played an important role in the internal governance, mainly by improving the economy of the operators income for example, in order to motivate the operators to improve the performance of the company and increase shareholder returns, the British and American companies in addition to senior management as a short-term incentive pay higher wages and bonuses, but also to strengthen the senior management of the use of stock options made medium-and long-term incentive stock option system in the United States, Britain and some other European countries in recent decades, has been a wide range of development, and has a good empirical results.
In short, the most important feature of the Anglo-American model highly fragmented shareholders and fluidity it has developed and efficient capital market, perfect audit of the financial system, strict information disclosure system, active control over the market, developed market managers and with operator performance is closely linked reward mechanisms, shareholders' equity judicial relief mechanism in this mode, the developed and efficient capital markets to promote the rational allocation of social resources, to raise the competitiveness of enterprises.
However, the Anglo-American model also has a fatal flaw: the highly dispersed ownership structure leads to the shareholders in the exercise of the negative regulatory rights, generate free-riding behavior of a large number of small shareholders. Operators of short-term high liquidity of equity behavior. shareholders to pursue the maximization of return on investment, the case of business fluctuations may lead investors to sell, and thus lead to a hostile takeover., operators had to in order to cater to investors for short-term returns and high income needs, focused on the immediate or near-term interests of great importance to the realization of the short-term interests, thus ignoring the long-term interests. Third, the interests of the shareholders as the supreme interests, while ignoring the interests of other stakeholders.
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