Study On The Allocation Of Control Authority

with the long history of the research into the allocation of control authority of the enterprise, the thesis focuses on the research into the initial arrangement of control authority and the adjustment of the control in enterprise running on the base of present research works. And with the premise that the initial enterprise control depends on the special investment taking on the risk while the efficiency of decision-making depends on the allocation of knowledge, information and enterprise control, the thesis further studies the structure of the subject of enterprise control, the stimulus function and restricting system, as well as the centralization and decentralization of the authority.The thesis consists of seven chapters.Chapter one focuses on the brief review of the theory about the enterprise control.Chapter two focuses on the definition and the base of enterprise control. The enterprise control is embodied as decision making and decision management. And the first one is about the selection of the board, while the latter is distributed among the various classes within the enterprise. We realize that the enterprise is the agreement binding various elements together, with the base of equality, freedom between all the subjects. The reason why the employer can accept the employee or the workers can accept the capitalist's conducting in some degree, lies in that their employees can bring them more benefit and less risk than they do it themselves. And at the same time, the employees can protect their right though carrying out theeconomic sanction, just the foundation of enterprise Control. Chapter three focuses on the allocation and adjustment of enterprise control. In the initial debate of enterprise control, as the investors of special material take on the risk of being cheated by others and obtaining the uncertain surplus, they are more stimulated to seek for the protection of enterprise control, which is called the born right of the investors. Otherwise, it can result in the insufficiency of investment. And in fact, in the enterprise running, as a result of specialization, the top subject of enterprise control is more likely or forced to distribute the authority to the knowledge and information holders, which cannot only bring the comparative advantages of specialization into play, but also get full exploitation of the participants' knowledge and information.Chapter four focuses on the subjects of enterprise control, which can be classified as four categories, share holders, the board, managers and workers. The classification better explains the principle of the adaptation between risk taking and authority protection as well as that between knowledge and information and decision-making authority.Share holders have the original and top control. And the other subjects' rights originate from the authorization of the share holders. However, for the lack of knowledge and information needed when making decisions, the share holders always authorize most of the decision-making authority to the board, the core of the placement of enterprise control and responsible for making and deciding the important strategies of the company. With the rising of the managers, the board is gradually becoming the formalized part, led by the class of managers. Though the managers' right is from the authorization of the board, the managers are likely to have the practical control authority for their rich knowledge and information about decision making.Chapter five focuses on the stimulus function and restricting system of the enterprise control. The most important point is how to make use of the system arrangement, especially the restriction of both the internal and external system, to prevent the enterprise control's abuse, the management corruption, and so on. According to the present situation in China, the author holds the idea that the most important thing is the regulation of the stock market and the structure adjustment of the state-owned shares within quoted companies.Chapter six focuses on the evolution of the enterprise control, the process of gradual split of the two functions: managing decision making and the risk taking. In the proprietor ownership system, ownership and control authority are brought together. In the enterprise, the share holders provide the capital and take on the risk. But for the lack of needed knowledge and information, they often authorize part of authority of decision making to the board and the managers, and this can bring the comparative advantages of specialization into better play. Meanwhile, the manager revolution results in the authority shift to the managers, which is difficult for the share holders to restrict unless the investors' active anticipation into the company management. We make a research into the reform of the control authority in the state-owned enterprise as well as the problem of internal control.