A Study On The Corporate Governance Structure In China

Corporate governance structure is a very practical and common issue in the world. Recently, many listed companies in China have got problems in this aspect, which is seriously threatening the healthy development of both listed companies and capital market in China and is having negative influence on China's economic transition. Therefore, to study the status quo, problems and solutions of Chinese listed companies is a very important topic.Firstly, this article looked back upon all related illustration about corporate and corporate governance during different times, explored the origin and development of corporate governance, and analyzed the contribution of major theories. Based on this, this article summarized and compared the general four modes of corporate governance structure, namely: UK-US mode, Germany-Japan mode, South-east Asia mode and Russia mode. The comparison study aimed to provide a guide toward China's corporate governance structure.Secondly, according to the structure of internal corporate governance in Chinese listed companies, this article analyzed the problems and reasons in AGM, board of directors, board of supervisors and management. All those problems include bad share structure, weak AGM, lack of responsibility for board, lack of real independent directors, etc, which gave rise to inefficiency of supervision and internal corporate governance. Meanwhile, this article analyzed the external corporate governance environment of Chinese listed companies and problems of supervision factors including market supervision, stakeholder supervision, government supervision, law supervision and other external supervision. In the end, it pointed out that all those factors induced the failure of external corporate governance structure in Chinese listed companies, especially the negative role of administrative intervention and poor legal system. In order to do quantitative analysis on the relationship between internal corporate governance structure and corporate performance, and to overcome multicollinearity among each variable and lack of total analysis, this article tried to set a single comprehensive index (CGI) to measure corporate governance, which was based on share structure, board structure, management structure as well as capital structure. About the corporate performance, the index of ROE was adopted. All related data were selected from Shanghai 50 Index dated December 31, 2007. The result shows that although corporate governance has a positive influence on corporate performance, this influence is not so obvious.Finally, by analyzing the origin of corporate governance structure and considering the typical feature (openness) in Chinese listed companies, this article came up with that the key way to improve internal corporate governance is to increase transparency, reduce supervision cost and better motivation system and restriction system; while the key way to improve external corporate governance is to create a good environment for capital market, thus, government agency should position itself as a market rule maker and supervisor, it also should perfect the legal system especially in the way of information release, so as to limit speculative activities and avoid Gresham's Law in capital market.This article tries to make innovations in the following aspects:First, to divide the internal corporate governance structure according to the highest authority, decision-making body, supervision body and executive body, namely according to the role and position of internal parts in listed companies, and to explore the problems of internal corporate governance structure.Second, to illustrate that there is serious monopoly in China's product market, including administrative monopoly and economic monopoly, and there is excessive competition as well as the lack of scale of economy, all of which cause the supervision failure of product market in external corporate governance. Third, to set up a single comprehensive index (CGI) to measure corporate governance by factorial analysis method, and then conduct regression analysis between CGI and corporate performance. By taking 49 listed companies that constitute Shanghai 50 Index as samples, this article comes to conclude that although corporate governance has a positive influence on corporate performance, this influence is not so obvious.