Research On Corporate Governance Mechanism Of Listed Chinese Commercial Banks

As the speeding up of the process of international economic integration, commercial banks have faced more and more competitive pressures. Chinese commercial banks have improved their governance levels through their processes of system reorganization and listing, however there are still big gaps between listed Chinese commercial banks and top international commercial banks. Listed commercial banks'operating performances have upgraded, and their competitiveness have enhanced, however the main reason for banks'performance improving rely on scale economy brought by national economic growth, monopolistic market structure and high interest rate difference caused by government interest control. In the process of marketing competition enhancing and interest rates oriented by the market reforming, the key to enhance listed commercial banks'performance should be improving and enhancing their corporate governance. It is important to enhance market competitiveness through continuously improvement of their governance mechanisms. This is also the foundation for writing this paper. How are current conditions of their corporate governance? How do they introduce top international commercial banks'corporate governance experiences? This paper attempts to analyze current existed problems in governance structure of listed Chinese commercial banks from multi dimensions as the property right structure, shareholders'conference, boards of directors, board of supervisors, managers, etc. And it analyzes the reasons for these problems and proposes views and suggestions to optimize them.This paper, by applying modern enterprise theory, property right theory and corporate governance theory, and linking with commercial bank corporate governance characteristics, firstly analyses the current corporate governance conditions and formation processes of 14 listed Chinese commercial banks. It also sums up their corporate governance practices and experiences problems and deficiencies of listed commercial banks. Then it analyses several corporate governance models of international commercial bank. Based on comparative analysis, it proposes to build a new corporate governance mode organized by stakeholders'board of directors and external board of supervisors of listed commercial banks, which is general point of view of this paper. Thirdly, from the perspective of corporate governance mechanisms, it researches listed commercial banks'corporate governance problems. The paper is based on the point of view that the structure of property rights'impacts on corporate governance mechanisms is the basis for listed commercial banks'corporate governance mechanisms. Based on this view it studies corporate governance mechanisms of listed commercial banks at all levels as: shareholders'conference as the core shareholders of the decision-making mechanism, balancing mechanism of board of directors mainly formed by the board of directors, monitoring mechanism mainly formed by board of supervisors, and restricting and motivating mechanism guided by management staff.The structure and content of this paper are as follows:Chapter I Introduction The economic globalization has increased the competition of commercial banks and improving corporate governance is a common issue faced by all enterprises, which is the basic background for improving corporate governance. The purpose to research the corporate governance of listed commercial banks is to analyze corporate governance mechanisms of commercial banks, to reveal the existed problems, and to propose suggestions to solve them. Its significance is located at optimizing the governance mechanisms and governance environment. It will enhance listed commercial banks'standards and performance.Chapter II Basic theories Because listed commercial banks are enterprises, therefore its basic corporate governance theory should be the theory of the firm. This paper mainly refers to the main schools of theories of firms as transaction cost theory, agent theory, housekeeper theory, managers'theory and entrepreneurs - contract theory. Then it analyses property right theory and the beyond property right theory. It also introduces corporate governance problems'origin, concept and theories based on theory of the firm. Finally it analyses their corporate governance specialties based on the special characteristics of commercial banks, which is the key to corporate governance of listed commercial banks.Chapter III The status quo and problems of listed commercial banks in corporate governance In this chapter, it firstly analyzes history and status quo of the 14 listed commercial banks. In accordance with the data listed on their annual reports, it analyses their problems of ownership structure, shareholders, boards of directors, board of supervisors and other aspects of governance mechanisms, which provides empirical foundation for the subsequent study.Chapter IV International experiences of corporate governance of listed commercial banks In this chapter, it divides the types of corporate governance of commercial banks into three ones as, organization governance mode of Japan and Germany, market governance mode of UK and US, and family governance mode of Southeast Asia. While it performs a comparative analysis of the characteristics, governance performance of three different models, it studies their governance problems of listed commercial banks. It finally suggests the governance mode choice of listed Chinese commercial banks by comparative analysis based on introducing international experience.Chapter V Property right structure and corporate governance mechanism analysis of listed commercial banks In this chapter, it classifies property right structure of listed of commercial banks into three categories as dispersed equity, focused equity and country owned. It also analyzes the characteristics of the three structure of property right corporate governance. The influence of ownership structure on corporate governance mechanism has four main areas: agency costs, protection of interests of shareholders, agent right competition, and mergers and acquisitions. Based on above classifications, this chapter analyzes commercial banks listed on the structure of property rights and corporate governance performance relationship using empirical models. Its basic conclusion is that moderate equity dispersion is in favor of enhancing the performance of listed commercial banks. Based on this analysis, it suggests measures to optimize the structure of property rights of Chinese listed commercial banks.Chapter VI Optimize decision-making mechanism of shareholders'conference of listed commercial banks The chapter firstly defines type and nature of the rights of shareholders of the commercial banks. The rights of shareholders are the origin and base of listed commercial bank corporate governance. The shareholders'decision-making mechanisms of the listed commercial banks are the starting point for governance mechanism, therefore it is rational to study the mechanism of shareholders from the exercise of decision-making mechanism from the shareholder voting mechanism, shareholders voting rules, votes'calculation rules, voting right exercising etc. On these bases, it analyses general shareholders conference decision-making mechanism of commercial banks and it also studies empirically Chinese general shareholders conference decision-making mechanism of commercial banks. From above analysis, this chapter suggest to improve the shareholders'decision-making mechanisms of listed commercial banks from four aspects: First, a governance mechanism to protect the interests of small and medium-sized shareholders; second, a clearly restricting mechanism bound by the general meeting of shareholders; thirdly, setting up a balancing mechanism to convene the General Assembly of shareholders; fourthly, setting up a litigation for safe guarding shareholders'legal rights.Chapter VII Board of directors balancing mechanism selection of listed Chinese commercial banks Beginning with the rights and obligations of Board of directors, this chapter firstly studies the relationship between directors and shareholders. Secondly from four aspects as Board of directors'scale, composition, meeting frequency and CEO mechanism, it analyses operating mechanism of the Board of Trustees formation. This mechanism has formed the Board of Directors right balancing mechanism. In order to strengthen the independence of the board of directors, it also studies the restricting mechanism of independent directors. From governance role of an independent board of directors, this chapter proposes standards to judge the independence of directors. In accordance with these standards, it also carries out an empirical study on independent directors of Chinese listed commercial banks. The establishment of standing committee of the board of directors is a fine sign for measuring its professional and detailed development for corporate governance. This chapter also studies specially the functions of standing committee of the board of directors, and also researches it empirically combined with data of listed commercial banks. Through above research, it proposes measures to improve balancing mechanism of the Board of directors as: to guarantee the independence of the board of directors; professionalization of directors; playing role of independent directors; self-assessment and external assessment of the board of directors; setting up the culture of board of directors of listed commercial banks.Chapter VIII Forming and implementation supervising mechanisms of Supervising Board of listed Chinese commercial banks This chapter firstly of analyses Supervisors regime formation and development from historical and theoretical perspectives, on the basis of above researches and in accordance with the actual condition of the board of supervisors of the governance mechanism of listed commercial banks. The mechanism should include a mechanism for establishing board of supervisors, an independent supervising mechanism and a comprehensive monitoring mechanism. Moreover, the supervising right should be institutionalized to efficient monitor. On the basis of cleared duties of the board of supervisors, it should create an external, professional, and contract-based mechanism for the board of supervisors.Chapter IX Completing restricting and stimulating mechanism of listed Chinese commercial banks'management staff This chapter analyses the rights and obligations of commercial banks'managers, based on the relationship of principal-agent, it researches basically the theory's constraints and incentive mechanisms. It designs a restricting and stimulating model for the listed commercial banks in accordance with the principal-agent theory. It also proposes measures for this mechanism according to the established model.Chapter X Optimizing the external environment of listed commercial banks governance mechanism The decision-making mechanism of shareholders, the board interact and balance mechanism and the board of supervisors'supervising mechanism and managers restricting mechanism are the main mechanisms of listed commercial banks'corporate governance. However the ordinal operating of these mechanisms requires the support of the external environment. This chapter studies how to optimize external environments from the aspects of the legal system, banking supervision, government actions, information disclosure, controlling market by corporations, the managers'market, and product market etc..Chapter XI Conclusion The relevant studies have shown that the corporate governance of listed Chinese commercial banks has been improved significantly through the process of listing, however it still needs further optimizing itself in the aspects of shareholding structure, and independence and effectiveness of governance mechanism.