An Analysis On Chinese Corporate Governance Reform

Recently, research on corporate governance became a hot topic not only in China, but also in the whole world. It attracted the attention and research from all over the world. The world is becoming flat and the capital market is blending as a whole with the economic development. As a result, all the corporations are competing and developing in the same capital market. Under this kind of economic environment, all the corporations around the world reveal a character of harmony development. As China entered the WTO, there is some influence on the Chinese corporations. What we can confirm is that the Chinese corporations must take some effective measures to improve its own corporate governance system quality and its competing ability if they want to compete with the other countries'corporations.Therefore, the research on Chinese corporate governance reform should be not only rely on our own resource, but also utilize the experience from the other countries. This paper reviews the harmony reforms development in corporate governance system around the world, and also absorbed the experience from the Sarbanes-Oxley Act (Act). The enforcement of ACT produced a great influence on the other countries, such as Canada, Japan and German. All those countries reform their corporate governance system which followed by the ACT. Depended on the experience from the other countries, this article gives some advice on Chinese corporate governance system reform, which including four parts.Part I. This part reviews the definition and core problems in the corporate governance system, meanwhile, introduce the main pattern of corporate governance system in the world. We believe that the nature of the corporate governance is a kind of framework which connect the power and benefit between the shareholder and officers; the core of this system is to solve all the problems caused by itself through a net of corporate governance system arrangement; The idea of the system is to reduce the cost and enlarge the profit of corporation as far as possible. The whole corporate governance system is intended to solve the principal-agent problem.Part II. Analyze the reasons that drive the corporation governance system developed towards harmony under the economic globalization. Two aspects compose the main factor of this tendency, which including economic related factors, society factors and technology factors. With the development of capital market of the world, the development of economic in every countries and the corporation among countries. All the factors that make the corporate governance system develop towards harmony already become blending. They give big power to promote the corporate governance system.Part III. Comment and analyses the corporate governance development in USA, Canada, Japan, and the changes in the corporation among those countries. Corporate governance structures in both U.S. and Japanese firms have changed after the Sarbanes-Oxley and Commercial Code legislative reforms, even though, to date, the reforms are taking place in only a small number of Japanese firms. The obvious harmony character reveals in four aspects: First, reinforce the inside and outside supervision strength in corporation. Second, empower the corporation more autonomous right, which is already reveal in the right of choosing the pattern of board in Japan. Third, intensify the independence character of high officers in corporation. Fourth, strengthen the profession occupation requirement among the high officers in corporation. In practice, it is clearly that there are already have some changes, such as: First, reducing the director's numbers in USA and Japan. The director's number is around 10 in those countries. Second, increase the numbers of outside directors in corporation. In USA, the independent directors already occupied most sear of the board. Third, separate the role between the chairman of board and the CEO, which happened in most America's corporations. Fourth, pay more attention and reinforce to the independent definition of the directors in corporation. The America's corporations already review the definition of independent character, and gives more strictly definition on the independent term. Some corporations in Japan which adopt the America's governance pattern also redefine the"independence". Fifth, the governance pattern influences each other among large corporations under the economic globalization world.Part IV. Propose advices on Chinese corporate governance system based on the experience from the other countries under the economic globalization. The ACT put great influence on some developed countries, such as USA, Canada and Japan. All the reforms among those countries reveal that the tendency of harmony in the corporate governance field. The reform tendency give more power to the corporation themselves, and allow the corporations adopt their own governance pattern. Meanwhile, enforce the supervision power on the broad. We believe that the hold that the deep reason of the default in Chinese corporate governance is lay in some aspects, such as: First, unreasonable corporation structure; Second, confusing relationship between the broad and manage; Third, ineffective supervision system; Fourth, ineffective independent directors; Fifth, ineffective auditing system . In order to improve the efficient of corporate governance in Chinese corporations, we believe the reforms should be take in some field, such as: active healthy capital market, stimulate managers , restructure the role between the broad and manager, enlarge the adoption power of select supervision system, strengthen the supervision power and the auditing system.We can safely draw the conclusion that the corporate governance in Chinese corporation still has a long way to go, and only through some effective measures can the corporate governance system become more efficient. In order to achieve this goal, what we need is not only take reform measures in one field, but also to take effective measures in many place. The idea that we should hold is to use the views from the other countries and based the resource of our own.