On The Internal Governance Mechanism Of Transnational Corporations(TNC)

Today, in the hard international competition, the competitive advantages of the Transnational Corporations(TNC) have come to show out. These advantages not only include the monopoly status in the incomplete competition, the scale benefit of the products, the minimum of cost in the internal exchange, but also include the corporate governance mechanism. A lot of TNCs or large corporation groups are the Top 500. Why can they show themselves in the hard competition? It is not only because of their best products and services, but also because they have a good corporate governance mechanism and can deal with the interest relationship between the shareholders and the managers. And after China entered into WTO, more and more Chinese enterprises want to invest in the foreign countries or come into the foreign market. In order to compete with the foreign companies, especially the large corporation on the international market, the Chinese enterprises must have a good corporate governance mechanism. It is why I choose this topic to write my thesis. In the first chapter, the research purpose and significance are pointed out. Then the literatures related with the corporate governance are summed up. In the end of this chapter, the frame of the thesis is introduced. In the second chapter, the basic functions of the institutions in the corporate governance mechanism of TNCs are introduced. The institutions include shareholder board and board of directors. The financial supervision mechanism and the payment driving mechanism are also introduced in this part. In the third chapter, four cases are chosen to show the functions of shareholder board in TNCs. According to the research on these four cases, the conclusion can be drawn that the shareholder board is difficult to supervise the managers if there is not a big shareholder in the board. In the fourth chapter, four cases are chosen to show the functions of the board of directors in TNCs. According to the research on these four cases, the conclusion can be drawn that the board of directors in TNCs can supervise the managers efficiently in the corporate governance mechanism. Especially in American TNCs, the board of directors has a larger authority than other countries. In the fifth chapter, four cases are chosen to show the financial supervision mechanism of TNCs. According to the research on these four cases, the conclusion can be drawn that every TNC has an audit committee and an external auditor, which can supervise the managers. In the sixth chapter, four cases are chosen to show the payment driving mechanism of TNCs. According to the research on these four cases, the conclusion can be drawn that the managers of the TNCs all have their own special payment plans, which can combine the benefit of the shareholders with the benefit of the managers. In the last chapter, the Chinese practices are combined with the conclusions in the former chapters. In the Chinese large corporations or corporation groups, neither the shareholders board nor the board of directors can efficiently supervise the managers. And the enterprises all have not good financial supervision mechanism and payment driving mechanism. So they must set up a perfect mechanism on the shareholders board, the board of directors, financial supervision and payment driving.