State-owned Enterprises Under The Constraints Of The Institutional Environment, Governance Mechanisms To Select

Chinese institutional transition determines the nature of state-owned enterprise reform and its objectives and tasks to a large extent. The studies about these objectives and tasks in academic circles usually focused on the ownership structure of corporate governance structure, the governance mechanisms selection and the related principal-agent, etc. However, the specialized study on the governance mechanisms selection of state-owned enterprise under the constraint of institutional environment is still rare. What kind of corporate governance mechanisms the state-owned enterprises should choose, and how to build an effective governance structure, which are related to the operation of the micro-foundation of socio-economic and the thing if our transition institution can really make the company operation to meet the requirements of modern enterprise system. The purpose of this paper is to theoretically analyze the inefficient reasons of state-owned enterprise governance and the question of state-owned enterprise governance mechanisms selection, and to carry out empirical testing about some key conclusions.So far, the academic circles usually use the method of "introducing" or "transplanting" to study the problem of China's corporate governance mechanisms selection. These studies put forward the recommendations of China's corporate governance mechanisms selection through commenting on the developed countries' corporate governance mechanisms. This paper will point out, the selection of corporate governance mechanism should not overlook the role of institutional environmental constraints, and emphasizing the path dependent of institutional environment will determine the diversity of corporate governance and the personalizing of corporate governance mechanisms, so, the selection of state-owned enterprise governance mechanisms should base on the "introduction" and "innovation". Based on this path of analysis, the paper will attempt to research the problem of state-owned enterprise governance mechanism selection in the framework of institutional environment constraints, and theoretically analyze the selection of state-owned enterprise governance mechanism through analyzing the low-efficiency reason of state-owned enterprise governance and testing the roles of governance mechanisms under the current institutional environment constraint.In theoretical research, the paper discusses the mechanism of institutional environment on the corporate governance mechanisms selection, and then from the perspective of institutional environment, analyzes the deep-seated causes of state-owned enterprise governance inefficiency by using related theories. Study shows: the "absence" of state-owned property owners is the main reason that led to the "two-class principal-agent problem" in state-owned enterprises; the "insider controls" and "policy-burden" caused by "dominant shareholder" are the manifestations of "two-class principal-agent problem"; "dominant shareholder" and diversified business objectives of state-owned enterprises are the results of special institutional environmental constraints, and they can not be the key explanatory variables of state-owned enterprise inefficient governance, and the most important explanatory variable may be the institutional environmental constraints. Surrounding the institutional environmental constraints, this article focuses on the following two questions and come to the related conclusions: 1. The root cause of state-owned enterprises governance inefficient is the failure of governance to the external agent of state-owned property rights. 2. The fundamental way of state-owned corporate governance reform is to design effective incentive and restraint mechanisms about the external agent of state-owned property rights.About the mechanism of the existing governance mechanisms in state-owned enterprises, this article, still from the perspective of institutional environment, does a comparative analysis between the ideal environment and the real institutional environment, the optimal structure and the current situation, and discusses their roles in corporate governance and make the relevant inferences and assumptions. This paper mainly analyzes the roles of governance mechanisms in state-owned enterprise governance, such as takeover, the agent-rights competition and the board of directors. The author thinks: in current institutional environmental constraints, takeover can not be a governance mechanism that state-owned enterprise can depend on; the governance role of agent-rights competition is not significant in the current governance of state-owned enterprise, and may be an effective governance mechanism to internal agent only through some suitable innovations; in the case of ignoring the institutional environment, the existing governance mechanisms in state-owned enterprises that focus on the internal agent is difficult to achieve the really internal restriction and balance. Similarly, this article analyzes the external constraints questions in state-owned enterprise governance according to the institutional environment constraints.On empirical research, this paper use the multiple linear regression model to test the governance roles of the board of directors, ownership structure, financing structure, and management reward in state-owned enterprises by using the listed company data, and takes a theoretical explanation to the abnormal testing results. Empirical testing reveals: the size of the board of directors, the proportion of independent directors, the merger of chairman and general manager, are not related to the market value of listed companies, all of which show that the role of the board of directors governance mechanisms in current state-owned enterprises governance is limited; the proportion of state-owned shares and the total proportion from the second to the tenth largest share are significantly related to the market value of companies, which show that ownership structure is an effective governance mechanisms in current state-owned enterprises governance; "dominant shareholder" limits the governance role of outside block-holders in state-owned enterprises governance, however, it is not need to reduce the proportion of state-owned shares desirably for share restriction and balance in state-owned enterprises governance. The analysis also show that the rate of debt financing is negatively related to the market value of companies, and financing structure is still a governance problems in the current state-owned enterprises governance, and its governance function is limited; executives pay is significantly positive related to the market value of companies, and the share proportion of executives is not related to the companies' market value, all of which show that the incentive function of management reward mechanism to state-owned enterprises managers is limited.Based on the above analysis, the paper choose and construct the governance mechanisms of state-owned enterprises, and put forward the corresponding policy recommendations, desiring to provide a new ideas for the state-owned enterprises governance mechanism selection and promoting the reform process of state-owned corporate governance.