A Study On The Model Of Administration Governance: Institutional Environment And Performance Distribution

Over the years, the typical characteristics of Chinese CorporateGovernance is the coexistence of Administration Governance andEconomic Governance. The reform of Chinese corporate governanceachieves remarkable success for the stages of more than30years.Specifically, the Economic Governance is in the condition of preliminaryestablishment; then the Chinese model of governance is experiencing thetransition from Administration Governance to Economic Governance.However, the firm’s Administration Governance is still exists for a longtime and evolves unceasingly, because of the long-term planned economysystem and no-mature legal environment in China. In this context, thispaper studies on Administration Governance with combination of thetransition background of Chinese corporate governance. On one hand, thetransition from Administration Governance to Economic Governance in China is the typical extraction and distillation of "Chinese-style corporategovernance theory"; on the other hand, the Administration Governance inChinese context is the summary of the realities including theadministrative objectives, administrative appointment and administrativeresource allocation. From a practical point of view, the transition fromAdministration Governance to Economic Governance provide the growthopportunities and power in China; but on the other hand, this transitionmeans a certain degree of governance risk and controlling costs, whenEconomic Governance is not fully established. From the perspective ofcorporate governance transition, we should focus on AdministrationGovernance including the following research questions: Specifically,what is the Administration Governance? what is the theoretical basis,basic characteristics and the inherent operational mechanism ofAdministration Governance? What is the environmental incentives ofChinese system of Administration Governance? What is the difference between Administration Governance and firm performance in differentgovernance stages, and under different administrative intensity? What isthe root of the difference?The logical starting point of studies is the combination of theory andreality. On the whole, more research is stuck in the administrative aspectsof performance, and administrative-based measures of governance. Theyare mostly focus on the "one-dimensional framework" and "regionallevel". These research failed to find the difference of AdministrationGovernance for different types of firms. However, there are significantdifferences in the degree of state-owned firms and private firms. Atpresent, the domestic and international research for AdministrationGovernance have a big lag in terms of the number of documents and thedepth of theoretical integrity. So, we should further these studies in theview of localization, systematic and depth.Based on these points, this study follows the following steps: analyzing the problemâ†'ask questions (theoretical foundation andliterature review)â†'realities analysis (institutional transition and theAdministration Governance evolution)â†'study the relationship ofinstitutional environment and Administration Governanceâ†'study therelationship of Administration Governance and firm performanceâ†'conclusion. As far as the research path concerned, Firstly, we review thebasic literatures based on the research questions, including theinstitutional environment and Administration Governance, the threedimensions of Administration Governance and the AdministrationGovernance and firm performance. Secondly, this paper has defined theAdministration Governance, which combined with entrepreneurial theoryof comparative advantage and system theory based on the analysis of thelimitations of the traditional Administration Governance, Thirdly, webuild a unified analytical framework to analyze the transition of China’seconomic and administrative-type; ultimately, we divide the Strong Administration Governance into three models: the stage of administraivestructures(1999-2001), the stage of internal control(2002-2004), the stageof Economic Governance. Finally, we focus on the level of empiricalresearch, including the relationship between the type of institutionalenvironment and Administration Governance; and the relationshipbetween Administration Governance and firm performance.This paper is organized in accordance with the paradigm, which isfrom general to the specific and from theory to empirical research. Ingeneral, the main text is divided into seven parts. The second chapter isthe literature review section, which received the related literaturerespectively, from the general and specific research paths to summarizethe mains points and provide a theoretical base and research platform; thethird chapter is the connotation of the Administration Governanceincluding characteristics and measurement analysis to provide the basedfoundation of empirical work; Chapters V and VI is the theoretical analysis and empirical testing of the institutional environment,Administration Governance and firm performance; Chapter VII is theconclusion.In summary, this study constructed the index of StrongAdministration Governance and Low Administration Governance; thenwe measured theses difference for1999-2007stages of SOES and2003-2007stages of private firms. The main conclusions of this studyshows that the different institutional environment is "shaping" theChinese Administration Governance; furthermore, there is the differentenvironment-matching in each stages. Generally, AdministrationGovernance has the negative effect on market performance, but in aparticular historical period, the Strong Administration Governance ofSOEs has the weakly positive effect. Additionly, the Low AdministrationGovernance of private firms could protect firm property and balancelocal interventions. The party secretary holding posts in the board of directors can develops supersivision and balances effect to inhibit internalcontrol; however, this structure can produce the intervention effect in thearea of mature legal environment.Consequently, the conclusion of this study has strong effect onpolicy recommendations. First of all, we should hold the objective viewon Administration Governance in China; furthermore, we shouldstrengthen synergies to construct the institutional environment; finally,we should effectively prevent the intervention effect, which is producedby the party secretary holding posts in the board of directors.