Control Over The Financing Structure And Corporate Governance

The purpose of this article is to theoretically analyze the corporate governance issue and its governance mechanism. Definitely having put corporate governance into the modern theory of the firm, the article simply expounds the cause of corporate governance from the aspect of the nature of incomplete contract. Through combining with the fact of the modem firms, the article initially analyzes the complexity of the corporate governance issue. Then the author puts forward the most important opinion of this article -that is, (1)in the theory of incomplete contract contributed by GHM, residual rights of control are too abstract, which just like a "black box ", to lose quite a number of the ability of explanation in theory. (2)Hhe article replaces the residual claim with control right as the central conception to analyze corporate governance issue. The article abandons the abstract conception of "residual rights of control" and introduces more desirable conception of "control right", which can be further divided into "real control right" and "nominal control right". In this article they consist the conception framework of analyzing corporate governance issue and governance mechanism. Under this basis the article points that the separation between residual claim and control right, which has been observed by Berle and Means, should be understood the separation of residual claim and real control right The problem brought out by the separation is the right issue that needs to be resolved by the corporate governance. Afterwards taking the classical firm as the starting point, the article analyzes in detail the separation between residual claim and real control right and the agency problems which are caused by the separatioa The article especially analyzes the change of the configuration of real control right under the circumstance of introducing the outer investors, and also analyzes the benefit conflicts surrounding the real control right between shareholders and managers, shareholders and creditors, majority shareholders and minority shareholders. Finally the article divides the corporate governance mechanism into two classifications-internal control mechanism and external control mechanism, and also respectively analyzes them from the aspect of the real control right.