Innovative Governance Mechanisms Of The State-owned Enterprises

China has made great achievements in State Owned Enterprises (SOE) reform. However, though modern enterprise institution has been set up, the fundamental solution to the efficiency issue in SOEs hasn't been found. And no effective incentive and discipline mechanism (SOE professional entrepreneur) available for SOE managers is one of the key reasons. The incentive mechanism is not attractive enough for managers and the measure is too simplified, while the discipline mechanism is not logical internally and not healthy enough externally. Therefore this leads to two results: the first is that after China's accession into World Trade Organization (WTO), SOE will be at a disadvantage in the fierce competition with foreign capital and private enterprises for professional managers; the second is that the serious"insider control"problems in some SOEs results in the running-off of the state-owned assets. Therefore, the less attractive incentive and ineffective control problems must be solved and healthy incentive and discipline mechanisms must be set up to promote SOEs'reform and development.Based on the existing academic achievements and the situation of China, this paper analyzes the principal-agent relationship in SOE corporate governance and studies on the direct incentive and discipline mechanism, which adapts to China's state-owned asset management institution. It both makes the theoretical analysis on the designing guidelines of incentive and discipline mechanisms, and tries to explore the effective incentive and discipline measure in practice, in the hope of making some achievements in SOE corporate governance both theoretically and in practice.