Study On The Role Of Commercial Banks In Corporate Governance Of Listed Companies In China

In 1980s, a series of reforms were performed in transition economies. In the meantime, insiders control appeared in company, which severely deterred the sound finance system of developing countries. Consequently, in 1990s, World Bank launched a large-scaled international research about the role of bank in corporate governance, recommended the newly market economies in developing countries to import bank-based finance system and improve native corporate governance on this base. In China, the role of bank (especially commercial bank) in corporate governance is weak. The claims of debtors are just after plight. Bank's interests were eroded severely, especially in listed companies. In the experience of Germany and Japan has proved that to strengthening debtors'role on corporate governance can insure their interests. Considering the above mentioned, this paper make use of corporate governance mechanisms based on the property rights which are creditors'and shareholders'rights, and investigates the role of commercial banks on corporate governance of listed companies in China though director boards and corporate control market.This paper discusses the mechanisms and approach of which the role of bank on corporate governance in listed company by means of finance intermediation theory and corporate governance theory. It studies mainly on four mechanisms: bank debtor's supervised mechanisms, bank as shareholders, bankers on boards, and bank debt affected corporate governance though control market, more detailed as follows:Chapter 1, this part aims to form thesis'framework. Firstly, brings forward problems, and then on the bases of native and international data, puts forward research hypotheses, decides investigation methods, and sums up innovations.Chapter 2, the relations of a commercial bank and a company is analyzed from the macro and micro aspects. Firstly, finance intermediation theory which is from the macro point; secondly, enterprise theory which is from the micro point ,including corporate governance theory, corporate property right theory, capital structure theory and delegating theory ,etc.Chapter 3, this part mainly studies the corporate governance mechanisms of bank debt on view of relation of bank and enterprise. The author's main contributions are as follows: to sum up corporate governance mechanisms of bank debt, and to make experience research. By now, no one stated systematically corporate governance mechanisms of bank debt. This paper summarizes systematically them, including dynamical mechanisms of bank debt, debt term structure mechanism, finance mechanism, etc. This paper sepating the bank loan from the tatal loan, mainy studies the bank's governance effect on corporate. The loans are divided into short term and long term by debt maturity, and are investigated governance effect respectively. In the meantime, the author amends the measure method of free cash flow in experience research in China, improving the veracity of results of experience research.Chapter 4, this part mainly studies corporate governance mechanisms of bank as shareholder from the view of theorestics and experience research. By now the experience researchs on banks as shareholdeds have been discussed much overseas and theorestics studies rarely been found. And in China the topic of bank as shareholder scarecely appears. The author constitutes theoretical model based on investment decision-making theory, this model not only may make the results of experience clear, but also analyzes the bank as shareholder in developing countries. Moreover, this part mainly studied whether and how the bank will take effect through the most important governance mechanism--the board. In other words, this part explores how to participate corporate governance for the bank. The author makes the following contributions. Deeply research was conducted on how the bank will enter into corporate board. Though many papers advanced bank director or bank supervisor,there was rarely deep and meticulous research. This paper works on theoretical basis of directorate system, the practical mode, and international comparison for bank to be director board and finally come to the conclusion that it is feasible for the bank to enter into direct board. The main points are: The object and frequency for the bank to enter into director board are different under different corporate model. The reason are legal environment is a very important factor, besides, the benefit of bank itself is also a critical restriction which is called"contingent governance"。If we transfer the bank malign credits to ownership, the bank will exert the authority of stockholder and arrange people to enter into director board and it will bring supervision and service benefit based on information advantage of bank itself and corporate.Chapter 5 researches how the bank will govern the corporate through control market from the perspective of outside governance. The author makes the following contributions. It is generally believed that control market is a very important corporate governance mechanism, and banks can participate corporate governance by three means: firstly, to finance for institution investor, secondly, to transmit the information of target firm to other buyer, thirdly, to take over the target firm by itself. In China bank play weak or no role to participate corporate governance and control as a kind of financing institution, especially the business of bank and securities are separate where the relation will weaker. But theoretically bank will produce and transfer information as a financing media through which the bank will govern corporate In control market. The part works on corporate control mechanism based on control market theory and then make positive research on how the bank will play role in control market. It concludes that the bank can affect the M&A in the market through control market and credit relationship and finally govern the listed companies.Using bank's producing and transmitting information to market or other investors, we study bank role of control right market. Study find that bank lending intensity have a significant and negative effect on the probability of a borrower becoming a target and takeover completion rates. The evidences support the view that banks in China play impotent role in the market for corporate control. This finding also suggests that bank in China should play an important disciplining role in the market for corporate control. This study widens the view of bank role on corporate governance from the former research of bank debt as monitor.Chapter 6, this part gives the conclusion and policy proposals, and expectation of research in the future.