Corporate Governance New Thinking

At present, China is in the period of institutional transition, in which Chinagovernment have made great efforts on property right reforming in order to improvethe operation efficiency of state-owned enterprises. However, there are differentopinions on property right reforming from academia. Some economists think propertyright reforming is not a decisive method to resolve the problems of state-ownedenterprises. They think entrepreneurs are just bonnes of enterprises and they have norights to do MBO. The paper aims to provide a new angle of view to property rightreforming based on the research of the institutional economics and the newinstitutional economics .In our opinions, the corporation is a combination of contracts and a substitute ofmarket. The ownership of corporation contains residual right of control and residualright of return. There are uncertainties in the corporate operation and the uncertaintiescan not be secured. In the financial economics, the uncertainties are not only theproduct operation, but also the capital operation in the product market and capitalmarket. The real value of the firm is the result acting between intrinsic value andmarket value, which is represented by the abilities of the capital operation. So thepaper focuses that the transition of corporate governance from "capital hires labor" to"entrepreneur hires capital" comes from the uncertainties in the financial economics.In the corporate governance of "entrepreneur hires capital", the real capital providersonly receive required return and own final decisive power. Entrepreneurs are thestrength in front of uncertainties and the headsprings of innovation. It is a necessityfor corporations to reply uncertainties and it is the trend of corporate governance thatentrepreneur hires capital.Honestly, the way settling a problem will bring other problems. But there is no prefectsolution. It is no use to be afraid of the new problems brought by the property rightreforming, such as the losing of the state-owned capital. In our opinions, we shouldinsist on our property right reforming and make great efforts to settle these problemscorrectly.