Limited Control Study

The main topic of the dissertation is the corporate governance of limited liability company(LLC)in China based on a substantial observation by the author. The author holds that the basic relationship within the LLC is the cooperation among the shareholders as well as between managers and shareholders. The research framework is constructed into 3 parts: 1. The shareholders of the LLC. 2.The basic governance institution of the LLC. 3. The recognition and measurement of the human capital under LLC background. This dissertation consists of five chapters:Chapter 1, Introduction. The motivation, scope and the methodology applied in this dissertation are discussed in this chapter.Chapter 2, The shareholders of the LLC. First the author expounds the issues of property right of LLC and shareholders' equity. Transferring the ownership of the investment by the investors to LLC is considered as both the essence of the company system and the origin of the corporate governance. Then the author discusses the shareholders' basic liabilities, basic rights and the relationship among the shareholders of LLC. The main viewpoints of this chapter are: l.The basic liability of the shareholders of the LLC is to discharge the investment to the LLC. 2.The basic right of the shareholders is the claim to residue and govern the company in the form of shareholders' meeting. 3. Since the relationship among the shareholders can be distilled as "interpersonal cooperation", trustworthiness serves as the footstone of their cooperation. Considering the transaction costs, the number of the shareholders should be limited. Chapter 3, The basic governance institution in the LLC. First the author discusses the rights, the liabilities and the essence of the shareholders' meeting of the LLC, followed by the discussion on the design of the internal governance institution and the distribution of relevant responsibilities and rights in differentcases. At the end, the author explains the impact on the corporate governance caused by the change of the ownership structure and the emergence of the manager. The main viewpoints of this chapter are : 1. The shareholders' meeting may govern the LLC at will. 2. The existence of the board of directors is not integral. More often the board of directors is proved to be not capable enough to play the role of management. Thus the author deems that the board of directors is the result of balancing the shareholders' interests, as well as the result of minimizing the transaction costs among shareholders. 3. The employee stock ownership plan (ESOP) can have harmful side effect on the corporate governance. 4. There is no common standard concerning the design of the governance institution and the distribution of the relevant responsibilities and rights. 5.The existence of the dominant shareholders can reduce the transaction costs among the shareholders.Chapter 4, The recognition and measurement of the human capital of the LLC. The author classifies the owners of the human capital into four categories: pure manager, compound manager, entrepreneur and compound entrepreneur, and expounds the recognition and measurement of the human capital hi light of such a classification. The main viewpoints are: 1. Generally speaking, the settlement of compensation for the pure manager is quite easy, although it is affected by the market value, the system value and the manager's psychology. The humanism concept should be adopted when we appraise the performance of the pure manager. 2. The method used to recognize and measure the compensation for the compound manager still seems rather vague. Thus a flexible solution is an alternative. 3. The recognition and measurement of the entrepreneur's contribution has always been a dilemma to the shareholders, therefore some alternatives as "basic compensation plus compensation based on performance" and "claim to the management profit (MP)" can be used. 4.The decomposition of the compound entrepreneur's contribution and recognition and measurementof the human capital in general are...