The Corporate Governance Of China's Financial Enterprise And Power Game

The corporate governance of financial enterprise is key to maitaining sound development of financial enterprise and stable financial market. The corporate governance of financial enterprise not only involves the general problems of corporate governance, but also has particular features due to the credit amplification and intermediary features of financial industry. Therefore, it is necessary to explore the specific features in the corporate governance of financial enterprise. This has espacially practical importance under the background of China's current financial reform.The corporate governance under modern market economy refers to all the laws, organizations, culture, and institutional arrangement about enterprise organization, ocntrol mechanism, and benefit allocation, the appropriateness of which is one of the most important decision factors of enterprise performance. The corporate governance includes internal governance and externanal governance. Internal governance concerns the internal incentive and supervision system. External governance concerns both the market restraint system and the regulation system of corporate governance. The specialty of financial enterprise leads to the fact that regulation system plays an important role in the corporate governance of financial enterprise.This article conducts a comprehensive research into the specialties in the governance structures of financial enterprise and analyzes the current situation and particular problems in the corporate governance of China's financial enterprises. This article also attempts to use game theory method to make a preliminary analysis on bargain of power among revelvant players based on the case of 'the Huge Refinancing of PingAn Insurance Corporation'.The innovations of this article includes:1.The expectation of the players in the corporate governance of financial enterprise directly affects the result of the game.2.This article holds that the modern financial regulation should not be restricted to its protectional function. It should also create positive incentive through the systematic design of regualtion, creating pareto improvement through efficient bargaining. This article brings out the theory of fair and efficient regulation.3.This article, based on the theroy of corporate governance ecology, concludes that there are three tiers of governance structure in China's financial corporate governance: regulation governance, internanl governance and market governance. It also, based on bargaining model of concrete case study, concludes that the external regulation and capital market in corpoate governance interact and influence each other as well as improve each other.This article proceeds with the following chapters.Chapter one is about the basic theory of financial corporate governance. This chapte lays out the foundation of the whole article. It introduces basic theories of governance which leads to a general conclusion of the meaning of corporate governance: the corporate governance is a set of institutional arrangement through which the partners conduct cooperative bargaining and reach an efficient equilibrium. Based on the theory, this chapter further explores two outstanding problems in China's current financial enterpirise governance . The first problem is that since the equity structure is too concentrated and controling shareholders manipulates the board and makes the board a puppet and the controling shareholder a shadow director. This is the so-called 'major shareholder controls ' problem which highlights the bargaining between controling shareholders and minority shareholders in China's financial enterprises. The second problem is that the lack of financial regulation or inaccutate positioning of fianncial regulation makes the managers under weak restriants from the market, the regulator, and the shareholder, which is the so-called 'insider control'. To set up efficient system to direct the parties to conduct efficient bargaining is a crucial part in the corpoate governance of financial enterprise.Based on chapter one, this article describes the governance of three typical financial enterprises. Chater two describes the goverannce structure and power bargaining of banking enterprise. This chapter introduces the special problems in banking corporation and describes the reguilation of bank. This chapter also introduces the bargaining of different partners in bank governance. Chapter three and chapter four describe the governance of insurance corporation and securities corporation.Chapter five deals with the corporate governance of hybrid financialenterprises. Althoug the matual degree of capital market and the supervision level of regulatory organizations do not allow hybrid operation of financial enterprises in China, it represents the future of financial enterprise operation. Moreover, hybrid operation has actually be on trial in China. Therefore, this chapter makes a introductory analysis of hybrid financial enterprise governance.Chapter six is a case study on the bargaining in the financial enterprise governance in China. This chapter works out two bargaining models to analyse the case of Refinancing of PingAn Insurance Corporation. The first model if from the perspective of controling shareholder and minority shareholder. The second model is from the perspective of regualtor and public corporations. Through model analysis, we find that when the market restraint fails regulation system plays an inportant role in the choice of the bargaining partners and the equilibrium of the bargaining. Of course, the regulation means huge costs and the current inmature capital market of China contributes to the regulation cost. So we should not rely on regulation but should also improve the market system and solve the problem of internal governance such as centralkization of equity. These are the purpose and direction of China's financial enterprise governance.Finally, this chapter makes proposals on the corporate goverance and regulation of China's financial enterprise.