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Corporate governance of listed companies in China

Author: TuYongHong From: www.yourpaper.net Posted: 2010-02-24 04:14:09 Read:
Abstract: This paper through the analysis of the impact of the corporate governance performance of listed companies, to study some of the major issues that exist in the current corporate governance structure of listed companies in China in the circumstances and the appropriate corresponding measures and countermeasures.
Keywords: corporate governance; internal control; financial governance; incentives

With the rise of the knowledge economy and the globalization of the world economy, the external operating environment and conditions are significant changes in formation to adapt to the development of the knowledge economy and the international requirements of corporate governance is an urgent need to address the problems facing the current development of China's corporate governance. Corporate governance is in the case of the agency relationship through the contractual arrangements of the system used to deal with the relationship between the enterprises of different stakeholders, shareholders, creditors, managers, workers, the rational allocation of residual claims and control over, the establishment of reasonable constraints and incentives to achieve business goals systemic institutional arrangements. Corporate governance mainly consists of two parts: (1) the formal governance system, including internal corporate governance and external corporate governance. Internal corporate governance, internal corporate governance structure, constraints, and the management of behavior by the shareholders' meeting, board of directors, board of supervisors and managers to control the system. The so-called external corporate governance, also known as an external monitoring mechanism, the implementation of the constraints of the control system through competitive external market and management system of the enterprise management behavior. (2) an informal system of governance, namely governance culture. Corporate governance culture is the shareholders, directors, supervisors, managers, employees, and other company stakeholders and their representatives, gradually formed in the process of participation in corporate governance, corporate governance philosophy, objectives, philosophy, ethics, code of conduct, system arrangements for its governance practices.
Corporate governance in the economic and social significance of
Of enterprises is a major issue is to establish a modern enterprise system, the core of the modern enterprise system is to establish a standard of corporate governance mechanisms, corporate governance mechanism reflects the stakeholders the main responsibility for the company's business process, the effective allocation of rights and interests the success of this mechanism, see how the efficiency of its operations, the Company's ability to effectively resolve their differences, and gathering strength, in the pursuit of shareholder value maximization process, and effective coordination between the shareholders and other stakeholders of stakes .
Second, the main problems of corporate governance in listed companies in China
Since China has proposed a modern enterprise system, the community "one share spiritual tendency, various enterprises competing restructuring, competing listing, to imitate foreign corporate governance structure to establish a corporate governance structure. However, China's low level of simple "copy" foreign corporate governance structure does not bring the expected deep-seated changes in the corporate governance of these companies, giving: 1. The equity diversified difficult in the context of the public shares in the absence of owners to form an effective checks and balances, internal control signs are everywhere. Listed companies have established a general meeting of shareholders, board of directors and board of supervisors, but these institutions in corporate governance Quenan spectacular. . Underdeveloped stock market does not a strong market constraints of listed companies, minority shareholders often become a listed company, the controlling shareholder grab personal gain "victim". Independent director system were all so hot, but these independent directors are often just take the money no matter what.
These problems of corporate governance mechanisms exist, defects in the existing system structure, imperfect development of the market mechanism, and also includes the problem of imperfect relevant laws and regulations, law enforcement is not enough. To sum up, mainly in the following aspects:
(A) of corporate governance culture building behind, do not pay attention to the construction of the corporate governance culture. Since the majority of listed companies in China from the restructuring of state-owned enterprises in the planned economy era, are communicated by the management plan of the above, employees only planned production, therefore, business managers and employees do not have the concept of corporate governance.
(B) Authority to set unreasonable, the lack of effective checks and balances and oversight of the company's "internal" mechanism. Set from the authority point of view, China's "Company Law" requires listed companies to set up a board of directors and board of supervisors in the system formally belonging the bunk Committee constituted by the Board of Supervisors of the board of directors representing the interests of the shareholders and to some extent on behalf of other stakeholders. However, the Board of Directors and the Supervisory Board by the shareholders' meeting elected each other do not have the direct appointment and removal of the power of control, in particular, the Board of Supervisors in the law only been given limited powers of oversight, there is no removal of the powers of the directors, the lack of constraints directors behavior means.
(C) The Board of Directors structural imbalance, "internal" and representatives of major shareholders control the board of directors, the board of directors is difficult to assume fiduciary responsibility. On one hand, the board of directors formed a control of the situation by a "key person" on behalf of the state shares or legal person shares of government-controlled, and the supervision of state managers are not perfect; On the other hand, a considerable part of the listed company, most of the members of the Board individual corporate executives senior positions at the same time, the high proportion of the Board of Directors in the "internal". This has caused the internal control phenomenon. Point of view from the mode of operation of the Board, the chairman of both for the company's legal representative, to assume direct responsibility for the operation of the company, also easily lead to the chairman of the board into a company's specific business issues, and make it lose the independence of management oversight.
(D) The manager market has not really form of management incentive and restraint mechanism is not perfect, but not strictly regulate the constraints and lack of management. That can not be determined due to the majority of the directors and managers are not generated by the competition of the market mechanism, the choice people have the necessary quality and ability, even qualified manager talent, due to procedural strict, it is difficult to obtain staff unanimously affirmed .
Third, improve corporate governance in China
The establishment of a standardized corporate governance mechanisms is a lengthy process that requires the concerted efforts of governments, regulators, investors and operators, to cultivate effective external governance of the Company markets through the gradual establishment of effective internal checks and balances, incentive and restraint mechanisms, improve relevant laws and regulations. The main effective way to improve the corporate governance of our country should be from the following aspects:
(A) to strengthen the building of enterprise culture of corporate governance. Strengthen corporate governance, the importance of the cultural construction of education, business managers and managers on corporate governance culture building.
(B) strengthening the independent director system. Requirements listed companies must improve the system of independent directors, the Board introduced a significant number and proportion of independent directors, and companies there is a potential conflict of interest matters, may be associated with the executive director and management decision-making authority granted to the independent directors.
(C) The perfect manager market. Ways and procedures to improve the management of the selection for the company's management incentive problem, open selection through election by the shareholders' meeting of the Board by way of competition in the market managers, by the Board of Directors in its oversight.
(D) the perfect the company external control mechanism is to establish a sound corporate governance laws and regulations system, we should pay close attention, you want to strike hard, and its creation of a favorable legal environment, and at the same time, improve its external market. Improvement in this regard should be relying on the state.
References:
[1] Zhou Jieqing. Corporate governance efficiency - an analysis based on institutional economics, Finance & Economics, 2003 (3)
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