Study On The Principal-agent Relationship Of China's State-owned Assets

At the end of last century, the socialism market economy has been established in China. At the beginning of this century, the most important task of our country is to improve the socialism market economy system. It will be the 2 most important process of the economic reform in the beginning of the 21st century is to improve the reform of the state-owned enterprises and to improve the reform of enterprises and to improve the management system of the state-owned assets. The principle-agent relationship has been established with the clarifying of the investor of the state-owned assets and the reform of the big and middle-sized state-owned enterprises, and this relationship began to be the important mechanism of the management mechanism of the state-owned assets. So, at the beginning of this century, the study of the principle-agent relationship of the state-owned assets is a very important aspect of the study on the reform of the state-owned economy. And it will has the important theoretical and empirical implications.IThis dissertation is an introduction of the basic theory about institution and institutional change. The institution is the sum of the roles of social behaviors which adjust human being's economic relationship. This conception is directly related with the self-interested hypothesis. To look the institution and its complex as a phenomenon of equilibrium doesn't mean that it's unchangeable. It's necessary to study the interdependency of the economic, political, organizational and social institutions and the nature of these institutions for understanding the diversity of institution and the complexity of modern economy. Marxism argues that the social system is a institutional system made of economic, political, juristic and cultural institutions in which the productivity decides the economic institution and the latter decides the other institutions. The so called "institutional change" or "institutional innovation" drives mainly at the change and innovation of economic institution. Marxism also argues that the productivity decides the production relationship, and the latter comes from the interest relationship, so the origin and evolution of the social institution are based on the interest relationship, that means the superstructure is decided by production relationship and the latter is come from interest relationship. The new institutional economics introduced the institution as an "endogenic" variable of economic development against the tradition of neo-classical economics, and caused a "revolution" of western economics. The new institutional studied the human being based on their real demands and motives, create a new platform and a new theoretical framework to study the behaviors, the interest relationship of human being. The institution is made of formal constraints and informal constraints and their enforcement mechanism. According to the above two kinds of theoretical analysis, we can definite the meaning, the origin, the nature and the function of the institution. The economists divided the institutional change to 2 kinds: the induced institutional change and the compelled institutional change. Both of these 2 kinds of institutional change has its own comparative advantages and the relationship between them is complementary, not substituted.IIThe theory of agent was about the conflict between principles and agents in limited companies. The principle-agent relationship could be defined as a kind of contract relationship, under this kind of contract, the principle(s) authorize the agent(s) to do something for the interest of the former. The key for building a principle-agent relationship is to establish and improve the incentive constraint mechanism. Under this mechanism, the signals of incentive and constraint from the principle must aim on the agent, clearer the direction of signals is, fewer steps the signals go through, more effective the signals will be, vis versa.The principle-agent relationship in the modern enterprises has its own characters: first, the principle could be both nature person(s) or juridical person(s); second, the agent could be a nature person as a CEO or a organization; third, the juristic relationship between the principle and the agent based on the contract between them; fourth, under some specific conditions, the agent could authorize some or all the responsibilities to others but this transfer should be as less as possible; fifth, the principle should restraint the behaviors of the agent in order to that the latter's behaviors should be consistent with the principle's interests. The principle-agent relationship of assets is based on the maturity of the principle-agent relationship of the enterprise, and the latter is based on the management division, the market economy and a society with legal system. In China, the principle-agent relationship of state-owned assets is not an equal contract relationship, but an administrative relationship, so the principle-agent relationship of state-owned enterprises in our country has some specific characters: first, it's multi-level relationship; second, the principle and the agent are exclusive; third, the administrative character of the incentive constraint mechanism; fifth, the principle lack of the real care about the state-owned assets.IIIThe state-owned economy played the most important role in China's economy, and the reform of the state-owned enterprises is the key part of the reform of the economic system. To build the modern enterprise institution is both the demand of developing the social production and the market economy and the direction of the reform of the state-owned enterprises. For this, it's necessary to maintain the principle of separating the government and the enterprise. The government take the responsibility of the owner of the state-owned enterprises through the representatives, and have the rights to get the benefit from assets, to make the important decisions and to choose the managers, and the enterprise take the responsibility to operate and the value retaining and increment of the assets. To reform the management system of the state-owned assets, it's necessary to build the system and mechanism of management, supervision and operation of these assets according to the principle of state-owned, laminated management, licensed operation and diversed supervision. It's also necessary to make a corporation reform of the big and middle-sized state-owned enterprises. The corporation institution is an effective form of the modern enterprise institution, an enterprise with single investor could be reorganized as a wholly owned company, an enterprise with multi-investor could be reorganized as a company with limited liability or a company limited by shares. The corporate governance structure is the core of the corporation institution, it's necessary to clarify the responsibility of the congress of share holders, the board of directors, the board of supervisors and the managers, to form an effective balancing corporate governance structure.IVThe conception of the principle-agent relationship in economics is a conception within the system of market economy, and it doesn't exist in the planned economy because in the planned economy, the nation is both the owner and the manager of the state-owned assets, and will control and operate the state-owned assets with administrative matures. But according to the differences of the ownership foundations of different kinds of market economy, the principle-agent relationship will also be different. In the western countries which the market economy based on the private ownership, the principle-agent relationship is within the enterprise, but in China which the market economy mainly based on the public ownership, the principle-agent relationship is laminated. In the system of the socialism market economy, the principle-agent relationship exists in the operational system of the state-owned assets. This system includes 3 operators: the owner of the state-owned assets, the operating agent of the state-owned assets, and the enterprise itself, all these 3 operators constitute a 3-level principle-agent relationship. The management bureau of the state-owned assets represents the owner of the state-owned assets, this is the first level of the principle-agent relationship; The management bureau of the state-owned assets authorized the operational power to the operating agent institution, the latter is in charge of the investment and supervision of the state-owned assets, this is the second level; the operating agent institution authorized the production behavior to the enterprise, the latter take the responsibility of the value retaining and increment of the assets, that's the third level.VThis relationship emerged in the initial reform of the state-owned economy and has improved in the process of the continued reform. At the beginning of this century, the further reform of the state-owned economy focused on 2 aspects: one is exploring the effective form of the management of the state-owned assets, and gradually build the system and mechanism of management, supervision and operation of these assets according to the principle of state-owned, laminated management, licensed operation and diversed supervision; the other is the corporation reform of the big and middle-sized state-owned enterprises, to improve their corporate governance structure, to build the balancing mechanism among the power institution, the decision-making institution, etc.. In these process, the principle-agent relationship has got a considering improvement with people's efforts, for the first time, the capital provider of the state-owned assets was clarified. The report of the 16th congress argued that the central government and the local governments represent the nation as the capital provider, this could be explained as that the board of the state-owned assets of the state department represents the capital provider of central enterprises, the provincial board of the state-owned assets represents the capital provider of provincial enterprises, and the city board of the state-owned assets represents the capital provider of city enterprises. Based on this foundation, it will be quite possible to improve further the principle-agent relationship of the state-owned assets. Besides, somebody argued that to make a market-oriented reform of this principle-agent relationship, it's necessary to choose the agent with market contract based on the market competition. And others argued that it's necessary to build a laminated framework to managing the operation of the state-owned assets which was made of the board of the state-owned assets the assets operation company and the enterprise.