Research On The Control Power Arrangement And Control Efficiency Improvement Mechanism Of Firms

Control power is a power to control firm's assets, decision-making, manage process and results. The arrangement of control power and its effect to firm's efficiency is always a vexed problem. Former works conflict each other and can't consider this problem with dynamic view. This paper discussed different control power arrangement and factors affecting control efficiency under different control power arrangement,with control efficiency as a core. All document as follows: The principal-agent relations of firms are theory basis of discussing control power arrangement and control efficiency improving mechanism. Classical firms are based on schareholder ownership and shareholder is the principal and controller at the same time, whose principal-agent relations are different from the Morden Corporations. Morden Corporation is based on corporative ownership,in which all memebers of corporate are owners and principals, and the board of derectors and supervisors are control agent and supurvise agent respectively. In spite of the regulation of law, there are many factors inducing to different control power arrangement between diffrent members. In order to research the mechanism of control power arrangement, this paper have established game models to discuss the factors affecting and the process of control power arrangement. The arrangement of control power is affected by efficiency that is asked by market competence and firm members'behavior of pursuing benefit. Control power, supervise power and surplus claim are coexistent, so control power arrangement process is in fact a process that control power separate from supervise power and surplus claim, and their shift among firm members. Models include two man games and three man game models, and the process of control power arrangement and its results have been analysized. The results show that the man who has entrepreneur capacity should have control power, the man who has supervise capacity,can and will pay the cost of supervision should have supervise power. Without supervise power, control power is not accompanied with the power of changing residual arrangement. However, supervise power is accompanied with excess residual claim right. In the product team, symmetrical arrangement of control and supervise powers is efficient. However, when there are outer members who only supply capital but not participating in production, the symmetrical arrangement of control and supervise powers could induce controller's rent-seeking behavior, and active outer members must be supurvisor. So, when there are many benefit correlation members, supervise power and control power should be asymmetry. In large firms, the fact that powers ranks are benefit to efficiency has been documented by supurvise level model. Results of models have explained the necessity and ievitability of powers'unification and separation. Different power structures lead to the defference of factors affecting control efficiency between firms. Classical firms'control efficiency is main restricted by entrepreneurs'capability. The Morden Corporations'control efficiency are affected by five aspects under the laddered and seperated power structure: controller's behavior orientation, supurvise efficiency, market competence, incentive contract and controller's capability. The former four factors reflect control power agent costs, and the last factor reflects the contribution of control power arrangement to value creation. Under the condition of asymmetry information, the exposing and exertion of controller's capability are effected by the former four factors, so agent costs is the most important to control efficiency. Because agent costs factors are related nearly with corporate governance, the efficiency of three control styles—shareholder control, manager control and allying control—are different. In order to improve control effiency, agent costs must be reduced and controller's capability must be increased. We can do this by ways from inside and outside, but because of the uncertain of market, we pay attention to the inner of firms. All the measures include three aspects: one is controller arrangement mechanism;one is supervising system, includes choice and ensuring functions of supervise organization, and supervisor incentives;the third is manager's incentive mechanism, includs dynamic pay incentive contract, power incentive contract and team incentive ways. Due to validate the theory result, we compared different firms'efficiency and their influence factors with cases. This paper also did some empirical study on the control efficiency and its influence factors in Modern Corporation of China. By different indexes, we finded that China listed corporation's control efficiency is affected by stock structure, supervise of supervisor committee and board of directors, controller's capacity and controller's incentives. Empirical study documented the quadratic relation between stock and efficiency, and the positive relation between efficiency and independence of the board of directors. We finded controller's capacity and stock incentives can stimulate firm's efficiency.