Principal-agent Problem In China's State-owned Asset Management Research

As a joint of Chinese economic and political reform, the administration of state-owned assets is a hot and difficult issue recently. Every step of reform takes the attention and care of the entire Chinese population.At present, there are many disadvantages existed in Chinese administration of state-owned assets: Firstly, state companies have not got rid of the control of government. Enterprises can not be an independent corporate body with the right of autonomy and operation. Secondly, there are serious problem of "insider control" in state companies. The managers who own the right of control are able to make use of their information advantage to seek illegitimate gain, as a result to damage the shareholder's interest. Thirdly, state-controlled companies is the essential power institution who controls the core departments of subsidiaries, as a result the corporate governance structure is weak. These problems are caused by the principal-agent model of present state asset administration in the final analysis. In another word, it is the administrative principal-agent method that results in these problems.Based on lots of previous research about principal-agent theory, this paper studied the Chinese administration system of state-owned assets under the frame of principal-agent chain. It is concluded that compared to traditional administration system of state-owned assets, present administration system makes great progress to shortened the principal-agent chain, but still has some limitations, for example, the management extension is not clear defined; administration authorization by Assets Supervision and Administration Commission still not be cancelled; independent property right of Corporation is not supported and the ownership structure is not reasonable also.