Board Governance And Evaluation

After hundreds of years of development, the corporate system has been proved to be the most perfect and mature market agent, which plays a unique role in market economy, as well as the effective enterprise system. Accompanied with the corporate system, the board governance and evaluation has been always cherished by experts and scholars, investors, shareholders and others. Based on the principal-agent theory, stewardship theory of economics and management theory, the researches on board governance are flouring, although these researches do not reach consistent conclusions, provide multiple perspectives and dimensions for countries to improve the board of directors of the state-owned enterprises governance. This paper, systemically, has studied the existing studies of domestic and abroad, analyzing the research angles of existing studies, limitations and the values for this paper's research, meanwhile summarized the universal main factors which influence the board governance and evaluation. In this paper, the basic idea is that the board governance model and governance efficiency are not only restricted from the internal of enterprises, but also from external checks and balances which is even more important. The study of theories certainly should combine with practice, after practicing, the theoretical innovation could be come to realize, and guide the perfection of corporate governance in a country, there is no universal standard.This paper systemically summarizes the western state-owned enterprise board governance modes and differences, as well as the running characteristics of China's state-owned enterprises'board governance, and then taking comparison analysis on the board governance between China's and foreign countries'state-owned enterprises. The basic idea of this paper is that the micro aspect of corporate governance is a functional system, namely, the pursuit is enterprises'goal, the support is institution system and the basis is culture. Which is a dynamic process with the governance bodies perform theirs functions effectively, inevitably influenced by a country's political system, economic system, market development degree and as well as the core value system and core values. As we can say that this is the consistent requirement in common and essence for every country to perfect state-owned corporate board governance. As for western corporate governance mode has its foundation and soil, that is compatible with its political system, the humanistic environment, social and economic development stage, it is in this environment the board governance mechanism can be developed and improved. While for China's state-owned enterprise board governance, basing on history, cultural tradition, economic and social development, is the result of long-term development, gradual improvement, and the organic evolution, inevitable adjusted with China's national management system and management ability, otherwise cannot obtain good effect. There are many defects and problems existing in western countries'corporate board governance, which are making up through market and law. However, China is in the primary stage of socialism, the legal system and market economic system have not been well established, if we do not consider China's characteristics and environment, copy the western country's mode, the flaws of western's board governance will be bound to be amplified in China, which will hinder China's economic construction and social development.The board governance is a stronger practical economic subject, strongly relying on economic and social environment. The theories of company governance and board governance is based on the relative economic theories, involving with the theories and knowledge of management, law and social science, which has very strong practicality and theroreticality, many experts and scholars share this same view of point. This paper systemically summarizes the board governance of the state-owned enterprises under the central government (referred to as CSOEs hereafter) pilot ten years of experience and lessons, and comparative analysis of other state-owned enterprises' board governance, taking this as the basis, we analyzes the factors affecting the board governance of CSOEs from both the external and internal aspects of enterprise. CSOEs are different from other state-owned enterprises on economic scale and role on the support of national economic development. Different from other state-owned enterprises, CSOEs'governance bodies'relationships are more complex, although there are some common influential factors among CSOEs, other state-owned enterprises and other ownership enterprises, the influences are different. But as the body of market competition, CSOEs are the same as other enterprises including other ownership enterprises, the common influential factors on enterprises'board governance are existing as well, while those contents have already been discussed in a lot of literatures. The basic principle and idea, which hold in this paper, are based on the combination of the special stage of China's economic transformation and the perfection goal of state governance system, based on that corporate governance is a micro expression of macro national governance, based on the perfection of the board governance of CSOEs is a major change of enterprise system under the leadership of the Communist Party of China."The decision" of the third plenary session of the18th central committee of the Communist Party of China takes the perfection and development of the socialist system with Chinese characteristics, promoting the modernization of national management system and management ability as a general objective of comprehensively deepen reform. Therefore, the study on improvement of the board governance of CSOEs should set this general objective as foothold, shold be problem-oriented, and put forward to deepening reform.In this paper, on the basis of the above understanding, put forward the policy recommendations of further improve the board governance of the central state-owned enterprises from the angle of practicality and maneuverability. A breakthrough suggestion is to put the enterprise party organization into the category of corporate governance, and along with the board of directors, board of supervisors, and managers constitute the main body of corporate governance, the party organization just focus on the role of political core, and participating in making important decisions; each agents, depending on the organization rules of operation, centers on the enterprise's overall goals, realizing balance each other in coordination and vice versa, supervision in cooperation and vice versa with the organic fusion,"respective responsibility, coordinated operation, effective checks and balances". Another innovation is to classify CSOEs, and on the basis of categories, making different suggestions on board governance according to the different features of state-owned companies, putting the spirit of the third plenary session of the18central committee of the Communist Party of China about deepening state-owned enterprises reform into the specific scheme and policy suggestion, which reveals the perspectiveness and practicability of this paper on perfection of CSOEs'board governance and evaluation. Moreover, the nature of governance emphasis on the relationship and gaming among the governance bodies, this paper bring up settlements on duties, rights and interrelations, underlining the systemity, continuity and perspectiveness of proposed policy suggestions.Throughout scholars'studies and evaluation practice of foreign countries' company's board governance, there are existing differences on the design and content of board governance evaluation system among different countries, different companies, meanwhile some important common characteristics shows, which have extremely positive reference and inspiration on the study of board governance evaluation system design for China's CSOEs. In this paper, on the basis of immense studies at home and abroad for reference, we adopt analytic hierarchy process and put forward the evaluation index system of the board governance as well as the weight of each index from two latitudes of which are board governance characteristics and board governance behavior. The aim of board governance is for enterprises'healthy development, although this has not included in the system as the third latitude, the influence of subjective factors has been reduced dramatically through quantity transformation of subjective index and experts'assignments. Meanwhile, by using the index system for the quantitative analysis of the board governance situation by the CSOEs pilot for nearly three years, this paper provides a different perspective and the basic tool for the shareholders (SASAC), other investors, and creditors to measure the board governance of central state-owned enterprises. On the basis of this tool, different governance body can be further improve, enrich relevant indicators, gradually realize the scientific evaluation, in order to improve the efficiency of board governance, and enhance the board governance level of central state-owned enterprises.