The Research Of Operating-mechanism Of State-owned Enterprise Board

Compared with corporation governance structure, which has been enjoying common concern in both theory and practice, corporation governance mechanism has received much less, or even inadequate attention. As a matter of fact, it is the effective operating mechanism other than a normal structure that exerts more influence on the enhancement of corporation governance efficiency. In view of the above-mentioned facts, this thesis presents a thorough study of the operating mechanism of the board, one of the subjects in the governance structure of government-owned enterprises. Based on the current State-owned Assets Supervision and Administration System (SASAS) and the actual operation of state-owned enterprises, this thesis, under the dimension of time and space, divides the operating mechanism of the board into three parts: internal governance mechanism, external governance mechanism and decision-making mechanism. The internal governance mechanism, the internal foundation of effective operating, refers to the governance regulations inside the board. It consists of three aspects: directors' appointment and removal, board's structure management, and the assessment, encouragement, restrictions and responsibilities of the board. The external governance mechanism, external foundation of effective operation, refers to the governance regulations outside the board. It involves the mutual relationship of the following five sets: the board and the board of shareholders, the board and the board of supervisors, the board and managers, the board chairman and the board, and the board chairman and the general manager. If the internal and external governance mechanisms are divided in light of the space, the decision-making mechanism is divided under the dimension of time. Since the ultimate goal of establishing and perfecting the internal and external governance mechanism of the board is to produce scientific and reasonable decisions. The decision-making mechanism is composed of the following parts: classification and acquisition of strategic information, rules of procedure, organization, discussion subjects and resolution of the board meeting, as well as the function-exerting mode of the chairman. With a view to such basic conceptions, this thesis falls into the following six sections.The first section is the introduction, in which the research background, subject under discussion, major research methods and originality of the thesis are illustrated. At present, according to the spirit of the 16th National Congress, SASAS has beenestablished from the central to local governments and the so-called phenomenon of owner-absence has been effectively checked. It is an inevitable challenge faced by the State-owned Assets Supervision and Administration Commission (SASAC) of all levels to realize the transition from administering assets and enterprises to administering capital in accordance with the Company Law and the State-owned Assets Supervision and Administration Regulations. However, current study of governance structure concerns general enterprises, thus doesn't take into consideration the characteristics of state-owned enterprises and the new pattern of SASAS, not to mention giving a systematic research of the governance mechanism of state-owned enterprises. In this paper, research methods such as documentary survey, deduction and interview have been adopted to probe into the operating mechanism of the board. As a basic introduction of the whole thesis, this section aims at describing the significance, target, methods, train of thought and achievements of this study.The second section analyzes and compares some typical governance models of different countries, that is, single-layer model of England and America, dual-layer model of German and Japan, South East Asian model, Temasek model of Singapore and models proposed by some Chinese scholars. As a foundation of the follow-up research, this section, by discussing the features and tendency of company governance mechanism in different regions, with different cultural and system backgrounds from the industrialization era, attempts to provide a general framework for the board's operating mechanism in the governance structure of the state-owned enterprises in the track-shifting period of our country.The third section, departing from the internal governance mechanism, discusses the directors' appointment and removal and board's structure governance, assessment, encouragement, restrictions and responsibilities. Only when those basic internal problems are solved can the governance mechanism be completed and the governance structure be regulated and be effective. This part also analyzes the general regulations of directors' appointment and removal and board's structure governance as well as the current governance situation of those factors and suggests enlarging the proportion of external directors to avoid internal control. However, an independent board system is deemed unnecessary for state-owned enterprises. As to the assessment, it is considered requisite to reform the current method of assessing the directors and upper managerial personnel as a whole and establish a system in which the SASAC assesses the board, and who in turn assesses the managers. In specific, assessment consists of quantitative and qualitative ones. The former considers director value as a key index while thelatter mainly comprises quality assessment and behavior assessment. In terms of restrictions and responsibilities, after discussing the regulations under different law systems, this paper comes to a belief that the current obligations and restrictions are far from enough and should be intensified.The fourth section, departing from the external governance mechanism, discusses five coordination mechanisms of the following five sets of relations, the board and the investor (S AS AC), the board and the managers, the board and the board of supervisors, the board chairman and the board, and the board chairman and the general manager. These interassociative relationships which form the external environment of the board are key factors that constrain and affect the efficiency of the board. Thus, straightening out those relationships and defining respective responsibilities become a prominent and typical problem faced by the board of state-owned enterprises. Based on the Company Law and the State-owned Assets Supervision and Administration Regulations, this section discusses the basic processing rules and current situations of those five relationships and proposes the fundamental regulations that should be established.The fifth section deals with the decision-making mechanism from the following aspects: classification and acquisition of strategic information, rules of procedure of the board, organization, discussion subjects and resolution of the board meeting, and function-exerting mode of the chairman. Since the ultimate goal of improved governance structure and effective operating mechanism is to produce scientific and valid decisions, an essential problem faced by the board's operating mechanism is to help the board to produce final decisions. If the information acquisition serves as the basis of enhancing decision-making efficiency, other points such as rules of procedure of the board, organization, discussion subjects and resolution of the board meeting and function-exerting mode of the chairman exist as important factors in this respect.The sixth section is a conclusion. Based on the above-mentioned research, it analyzes the basic position of the board of state-owned enterprises and clarifies the necessity of building up a functionally powerful governance-type of board which undertakes three functions: stipulating strategic plan, supervising and administering managers and making important decisions. Furthermore, questions as to how to establish such kind of board and perfect it through internal, external and decision-making mechanisms are also investigated. As to the composition of directors, it is recommended in the thesis to let the bank enter the board in the identity of creditor. Furthermore, with regard to the external governance mechanism, special suggestionsare given to make SASAC a proprietary department rather than an organization close to an administrative organ of the government. And as far as the decision-making mechanism is concerned, it is emphasized that the decision-making process should be managed in terms of process assessment and eliminating the imbalance of information.The first two sections, in which general factors of this research and common models of governance structure are preliminarily probed into, serve as the research basis of the whole paper. And the following three parts depart from three mechanisms respectively and deal with some specific issues concerning the operating mechanism of the board of state-owned enterprises. Finally, based upon what are expounded in the first five sections, conclusions and suggestions are made in the sixth section.The originality of this thesis lies in three aspects. Firstly, the study subject, that is, the operating mechanism of the board of state-owned enterprises under the new-pattern of SASAS, is rarely dwelled upon. Secondly, this thesis, under the dimension of time and space, divides the operating mechanism of the board into three parts: internal governance mechanism, external governance mechanism and decision-making mechanism. Thirdly, this thesis makes certain investigations into the argument from different aspects, such as the establishment, position and assessment of the board, settlement and coordination of external relationships, and perfection of decision-making mechanism through process assessment and eliminating the imbalance of information.The deficiency of this research also lies in three aspects. Firstly, a quantitative analysis of the relationship between certain relative factors and achievements is absent. Secondly, since no questionnaire is given out to collect relative data, information is not exhaustive enough. Thirdly, research on the feasibility and executive method of setting up specialized committee under the board is somewhat inadequate. All those aspects deserve to be given improvement and further research.