On The Capital Markets And Corporate Governance

The main contents and standpoints of this article can be summarized as follows: The first part analyses the theories about the functions of the capital market to Corporate governance. Corporate governance came into being is because of the deputy problem and incompletion contract problem caused by the separated ownership and control of corporations. The existence of deputy problem needs to supervise and control manager's behaviors. Nevertheless, because of incompletion contract problem, it impossible to work out a contract included everything to control manager's behaviors. Corporate governance is importance to increase deputy income and turn down cost. The second is about the main contents of Corporate governance: inner and exterior managing structure. Exterior managing structure is to engage, inspirit and supervise operator effectively through competitive exterior market system .Inner managing structure relies on exterior managing structure. Include directorate control, great stockholder supervise, the contest of manager dealership.The second part discusses the capital market's contributions to corporate governance. Firstly, the quotation discovering mechanism of capital market; secondly, the taking over mechanism of capital market; thirdly, the payment mechanism of capital market; lastly, the liquidity function of capital marketIn the third part, the market and Corporate governance compare is shown in countries. The capital market and Corporate governance in the United States, Japan, and Germany are selected typically. Because of the difference in their securities business development, equity capital makeup, outer financing method, capital liquidity ,companies in those countries have their own features. Therefore, the growth and development in a nation's capital market are definitive to Corporate governance mechanism there.The emphasis is at the fourth part the capital market in China and the Corporate governance .At the beginning ,the management in the stare-owned firms before reformation and the changes in the management of Chinese firms are reviewed. Then analysis the actuality of Corporate governance. Before the reformation, companies had no any self-determining. Owing to the renovation in the state-owned company, many transformations have emerged where administration was dominated by the government before. Therefore, the outer-domination is replaced by the inner-domination. The managers have got some administration right but they are appointed and removed by the government. Now the actuality in the company is bonus stock's abnormality, administration's deformity, big-stock-holder abusing their right, small-stock-holders hitchhiking, inner-domination ubiquitous, manager's moral risk bad, creditor's-right out of control, restriction on managers unsound, outer-administration failed. Final, analyzes the Chinese capital market's contribution and the restriction to corporate governance. The capital market in China has offered much to the foundation of mordent enterprise system and Corporate governance. But it restricts the company's administration.At the last, it discusses how to make good use of the capital market to improve the Corporate governance. Effective Corporate governance will primarily give investors correlative information about its management. The quotation discovering mechanism slows down the asymmetry in the information between the investor and the manager, and reduces the investor's cost to supervise manager. Therefore, by liquidity function of capital market. Investor can indirectly control the inner-administration. But all of this requires an effective capital market. First, it analyzes the reason of the inefficiency in Chinese capital market ,which is the faultiness in the message publicity and the bugs in entrance and withdraw system and so on. Therefore the message publicity and the legal system's construction must be improved .The function of the liquidity of capital market plays an essential role in capital market's effectively working, especially the supervision mechanism'...