Research On Corporate Governance System Establishment Of China's Listed Companies

Since 1990's, with the development of economic globalization and shareholderism, corporate governance in listed companies has been increasingly becoming the worldwide focus. Financial crisis, enterprise scandal, company bankruptcy etc. in various countries initiated thinking on the efficiency of traditional corporate governance mode and its trend in the field. At the same time, there is no restricted relation among stockholders' meeting, board of directors, supervisory board and senior administrators in more than 1300 china's listed companies, which led to disintegrate the function of supervision and restriction; nonstandard managing of the board of directors, the directors' unfulfilling their duty of loyalty and care; formalistic supervisory board; lack of incentive and restrained mechanism. The flaw of corporate governance such as the inexistence of outside monitoring and so on resulted in continuous emergence of problem stock such as YINGUANGXIA, ZHENGBAIWEN, STHOUWANG, LANTIAN CO.LTD., and YORKPOINT S & T CO. LTD., which became the institutional barriers to the healthy development of stock market. Although some solutions were put forward in Corporate Governance Rule for Listed Companies according to the above problems, specific countermeasures to protect mid and small stockholders' rights ---"cumulative voting system", executive stock and salary system based on performance, the institutional arrangement on the independence of supervisory board etc. were indefinitely designated, which made its maneuverability inadequate. Therefore, designing more practical corporate governance system should be the most urgent task for our listed companies as well as for the whole capital market. This paper took domestic 1226 A share listed companies (till July, 2004) in Shanghai & Shenzhen stock exchange as the research objects, employing related theories of economics, finance, management and methods of institutional, dialectic, comparative and empirical analysis to deeply study the advantages or disadvantages of corporate governance mode, its assimilation, framework and route of corporate governance system establishment of china's listed companies and other related core question.Firstly, on the basis of using for the reference of research productions, the thesis designated corporate governance and its related concepts as well as its primary functions, compared corporate governance with enterprise management and pointed out that they hadmutual frontier in strategy management. It defined that stakeholders' co-governance was the evolving trend of firm contract through completely summarizing the theory of firm contract and its branches as the basis of corporate governance as well as corporate governance approach itself.Secondly, the thesis reviewed the international corporate governance movement whose manifestation was formulating the rule of corporate governance. It expounded the background of the movement, typical governance rules and corporate governance reform represented by Sarbanes-Oxley Act. Meanwhile it indicated the direction of corporate governance, in which stakeholders would play greater roles in corporate governance, information disclosure system would be increasingly perfect, the transparency of corporate managing would apparently increase and the independence of director board would enhance gradually.Thirdly, the thesis defined that the overall corporate governance was the integration of "static" corporate governance structure and "dynamic" corporate governance mechanism and deeply analyzed their governance principles as well as dialectic relations. It especially stressed the function and position of director board as the core of internal governance, external governance modifying and replenishing the imperfection of corporate governance.Fourthly, the thesis compared four international typical corporate governance modes, namely the U.K & the U.S stockholders governance mode, Germany & Japan creditor governance mode, eastern Asia & southern-Eastern Asia family governance mode, mid & eastern European transition economy governance mode in aspects of internal governance, outside monitoring and prominent problems etc., deeply analyzed the reasons for the deference and assimilation, put forward that the assimilation provided convenience for china's practical choice.Fifthly, on the basis of tracing back to the history of corporate governance of china's listed companies, the thesis analyzed the inferior governance conditions generated from specific ownership structure, inefficient securities market and inferior listed companies, which resulted in the prominent problems that weak internal governance and lack of external governance. Therefore it concluded the necessity of corporate governance system establishment combining internal and external sides.Sixthly, according to the existing prominent problems in china's listed companies' corporate governance at present, combining the new trend of corporate governance, referring to the guideline of corporate governance regulated by international organizations, developed countries and CSRC, considering the institutional environment of capital market, law & regulations etc., the thesis set up the framework of corporate governance system of listed companies. In addition, it designed the establishing route that beginning with internal governance perfection, cultivating and developing the outside market and stakeholders monitoring as the following countermeasures.Finally, the thesis did empirical study taking American ENRON co., china'sYINGGUANGXIA, HOUWANG co. Ltd as negative cases, HSBC and CHINA PETROLEUM & CHEMICAL CORPORATION as governance models, further demonstrated that corporate governance was the institutional guarantee for listed companies performance and the rationality of corporate governance system combining director board as the core of internal governance and outside market as well as stakeholders monitoring.