Research On Corporate Governance Of State-Owned-Enterprises In Transition

The key point for State-owned enterprises (SOEs) to implement companization reform is to perfect corporate governance. Although the majority of SOEs have established the similar mechanism of internal decentralization and balance of powers as the western companies', the deep structure of SOEs is composed of legal representatives, the communist party committee and the Party managing cadres. Two apparent characteristics of such mechanism are observed as following. For one thing, high centralization of power prevails among SOEs, for the companies are completely controlled and managed under the governance model of "one person dominance", which is set up by legal representatives and the Party secretary in the process of personnel assignment with the features of "unification of the Party and the government". For another thing, not all the powers of legal representatives (and the Party secretary) are derived from the government ownership of SOEs, but from the mechanism of Party managing cadres. Thus, the current SOEs governance model is not only different from the traditional leading system of enterprises owned by the Whole People (initial pattern of the SOEs reform.), but also different from the corporate governance under market economy system (the target pattern of SOEs reform). In addition, distinctive Chinese style during transition period distinguishes the present SOEs governance model from the western companies' in that the political supervision of the ruling party and the government to SOEs' operators takes place of the superficial owner governance. Therefore, this kind of SOEs governance with Chinese characteristics brings about a variety of the thorny problems in theory and practice.Grossly, the researches on the SOEs governance can be divided into two parts. In theoretical aspect, attentions are mainly paid to the principal-agency theory, the application of this model to analyze the reason of insider control and the countermeasures to solve insider control. In practical aspect, the stresses are laid on the introduction and comparison of the different corporate governance model all over the world and rule-making of corporate governance. However, the majority of such researches are all verification of relatively mature theory and concept in foreign countries. In practice, as the component of economic system transition, the reform of SOEs governance, to a great extent, embodies the innovation and mutation process of formal rule which is dominated in the form of artificial design and interference. In a consequence, such kind of reform neglects the completely distinctive initial state and constraints between the SOEs in our country and the SOEs under the market economic system.Accordingly, this thesis attempts to approach the problems of SOEs governance from more comprehensive perspective and comes to conclusion that current practice of SOEs governance is virtually the product of political structure, a phenomenon of separation of ownership and control originated from the politics. The proposition of inquiry is put to proof pursuant to the realizing mechanism and evolution of SOEs governance.As for the realizing mechanism of SOEs governance, the internal mechanism of SOEs governance is constructed in the form of internal power allocation represented by legal representative and Communist Party Committee. The difference between internal mechanism of SOEs governance and the assumption of enterprise owner governance, classic western governance theory, lies in the following points: first, the former is high-centralization of internal power, but the latter is decentralization and balance of power on the basis of democracy; second, the former is a kind of external supervision, while the latter is a kind of self-managing, self-controlling; third, the former is lack of the connection to the market mechanism, whereas such connection is the characteristic of the latter assumption. In addition, the practice of Party-managing cadre, characterized by the political supervision to the SOEs operator, is the exterior mechanism of SOEs governance, which makes the attempt of ruling party and government to improve SOEs governance confronted with dilemma: in order to solve the problem of insider control, it is necessary to enlarge supervision and control strength, which requires more restrictive personnel control of SOEs operator and appointment of exterior supervision cadre with the same official rank; although the practice of adding supervisor can reduce the backdoor dealings of agent., it can also lengthen the agent chain of state-owned asset, which eventually leads to higher agent cost.To some degree, the real cause of SOEs governance problem lies deeper in its evolution history as well as environment of policy and system. Diachronically, in retrospect, leadership system of SOEs has witnessed three vital transformations and change since China carried out reform and open-door policy. Therefore, the essay makes an analysis on the essential reasons that result in each transformation and sums up two special features of the change: compulsory institutional change and secondary institutional change. The first feature throws light on that present system of SOEs governance is an institutional arrangement favored by the government. Then, the latter one emphasizes that the change of SOEs governance is an adjustment of secondary institution under the condition that environment of policy and system doesn't change fundamentally. As to the environment of policy and system, the basic environment of SOEs governance comprises the traditional culture, ideology and political structure of "great unification". Hence, there exists contradiction, naturally far from being reconcilable, between the political culture or ideology of high-centralization and such requirements of owner governance as market competition, separation and balance of powers. Whereas, this political culture or ideology of high-centralization has great affinity to SOEs governance with political supervision style. Besides, the system of two leaders, namely legal representative and Communist Party secretary, and the personnel policy of "Yi jian tiao" (mono-exclusive-party-and-executive system) is the copy version of present political structure. Consequently, the expectation of improving SOEs governance only through partial trial is doomed to be a dream. The reform and perfection of SOEs governance depend on fundamental transition of the society.