Gujing Distillery Co., Ltd. Corporate Governance Research

Corporate governance is an important part of modern enterprise systems, it is one of the key element that affect their competitiveness and the promotion of enterprises development, it is the key factor to ensure sustained and healthy growth of enterprises. The basis of Corporate governance includes the theory of transaction cost, agent theory and the stakeholder theory .The theory of corporate governance includes internal governance structures and mechanisms and external governance structures and mechanisms. Shareholders, board of directors, board of supervisors, managers constitute internal governance structures and mechanisms. The capital market, the manager market, the product market, regulatory and legal system constitute the external governance structures and mechanisms.Gujing company is one of listed companies in china. In April 2007, four senior managers were arrested for corruption and bribery, which showed that there are many defects about corporate governance . In this paper we analyze and research the Gujing company as a typical case for corporate governance.First, we analyze Gujing company from the internal governance structures and mechanisms. About the shareholding structure, the problem is that state-owned legal person has absolute quantity shares, in fact the mangers control the company. About the board of directors , the problem is that the quantity of independent directors is few and they lack professional quality, it makes the function of the board of directors weaken. About the board of supervisors, The problem is that supervisors have no professional quality, it makes the function of the board of supervisors weaken. About mangers, the problem is the abuse of power. On the one hand, since the lack of restraint, result in numerous mistakes in decision-making, on the other hand since lack of incentive mechanisms, a large number of self-serving opportunism occurs.Second, we analyze Gujing company from the external governance structures and mechanisms. About the capital market, the dual-class equity structure makes the shares of state-owned legal person can not flow, so that the governance is failure through the capital market. About the manager market, under the condition that state-owned legal person control the company, the governance is in the governance of state. The manager market imperfections make governance of the manager market failure. About product, since the failure of the capital market and the manager market , governance of product market plays negligible role.Finally, to Gujing company we point out ideas to improve in the aspect not only external governance structures and mechanisms but also internal governance structures and mechanisms. The reduction of shares of state-owned legal person, strengthening the functions of the board of directors and the board of supervisors, stock options is the root of solving the problem in the internal governance structure and mechanism. Establishing a unified capital market by the reforming the dual-class equity structures is the key to make the external governance structures and mechanisms such as the manager market and the product market role to play.