An Analysis Of Supervisory Board And Directors Complementary Regulatory Functions

The 20th century, the issue of corporate governance since the 90s began to get worldwide attention, and formed a corporate governance reform, globalization, corporate governance has become a modern company to enhance its core competitiveness of the key factors. Corporate governance structure, including internal governance mechanisms and external governance mechanisms, internal governance mechanisms, such as board of directors, supervisors, management compensation and large shareholders, etc.; external governance mechanisms, including corporate governance outside the mandatory mechanisms, such as legal control system and the laws of the market and so on. Internal governance is the foundation of corporate governance. Board of supervisors as the core of internal governance, building on the corporate governance structure, especially the role of sound regulatory function becomes particularly important. The single board structure will reduce the efficiency of corporate governance, but China has not yet matured as an independent director of the market, the introduction of independent directors will not have a fundamental solution to the problem of low efficiency of corporate governance.Governance of the board of supervisors is necessary to explore their practice in recent years, the background due to the implementation of independent director system, the relative competitiveness of national firms to enhance as well as the board of supervisors in the company's poor performance in governance. Independent directors from the Board of Supervisors and the relationship between the interest point of view, scholars have focused its attention on the board of supervisors and independent directors (or the Audit Committee) on the functional relationship to explore how we can build an environment conducive to the coordination of the relationship between the two institutional arrangements, for the practice provides a useful guide. However, because of the independent directors and the supervisory functions of the deep-rooted causes of conflict and the actual performance on the cognitive differences, resulting in regard to the relationship between the two has yet to reach a consensus. However, a point of view that the board of supervisors system exists at a deeper reason, one single director of the oversight functions in order to avoid defects. Second, in the specific complementary functions, including functions may overlap, but the exercise of the functions of the environment is not the same, this is not a merely functional division can be resolved. The governance structure of listed companies in essence is to establish the directors, managers, supervisors, shareholders and other investors'relations. Board of Supervisors a good model of governance. This concern is to monitor the regulatory functions would be that such a broad regulatory functions is included in the decision-making program needs to be done on the existing options of choice, but also included in the decision-making programs have been selected, the board of supervisors has the supervision of and against existing program functions. In this sense, the board of supervisors already has its raison d'etre, rather than simply a complement to supervision of directors. If only the complementary functions, it can give a company has been an institution to carry out the functions need to be supplemented period, without the need for establishing a separate board of supervisors. The establishment of the board of supervisors, and in the implementation of listed companies for so many years, must have its deeper causes, the reasons could be manifold, but this paper focuses on the main functions of the board of supervisors, from the regulatory function explains the importance of the board of supervisors. Of course, such reasons may also include the regulatory functions of the board of directors and board of supervisors in different environments to play a role.Innovations of this article is on the board of directors and the board of supervisors by the theory and system-building, development review, the use of the classic public tragedy (tragedy of the commons) game model analysis and empirical analysis of corporate internal governance of the regulatory functions of the draw the following conclusions:The introduction of monitoring will be to break that only directors of regulation, even now can not be quantified, in theory, bring about the introduction of the role of the board of supervisors, but it has been able to prove that a single director of regulation is the company's interests can not be maximized, and secondly, although the Supervisory Board and Board of Directors division on the part of the functional overlap, but the actual role of the environment, its functions are different. Because the director's income mainly comes from the stock of capital gains and dividends, so when the company performance and stock price is lower than to a certain level, the directors of the company's cost of providing supervision and advice to more than its revenue, will abandon their related functions become the "vase" director. By this time, due to the board of supervisors to face bankruptcy risk, the directors will be providing relatively low level of supervision and decision making.Supervisory board size and proportion to the square of items of corporate performance significantly negative correlation, which confirms the Supervisory Board and Board of Directors due to the ratio of performance with the company into the inverted U-shaped relationship, that is, when this ratio is small, as the increase in the proportion of the company performance has also risen. When you reach a certain degree, as the ratio continued to rise, corporate performance began to decline, which means that the board of supervisors size and board size for some percentage of on better, but to break this balance, the company's performance will drop, which an indirect description of the regulatory functions of the supervisory board's role, but also a constraint on the board of directors.Conclusions and policy recommendations are in corporate governance, in' addition to the importance of appropriate system for the establishment of the board of directors, but also attach importance to the board of supervisors in the corporate governance role. The actual situation in China, the firm establishment of the board of supervisors system and improve and develop the board of supervisors system is to improve the corporate governance structure and essential for the healthy development of the company. Of course, the specific ways to make the supervisory board of supervisors to play its biggest role and is not discussed in this article. But in the corporate governance characteristics of the board of supervisors to join our system is to increase the effectiveness of internal governance as an important tool.