Study Of Internal Monitoring Mechanism From The Perspective Of The Integration Of Company Governance And Management

As an important constituent part of the internal operating mechanism of listed companies, internal monitoring mechanism has received extensive attention from the theoretical and practical circle due to the vital role it plays in restricting generalization of corporate internal power, facilitating the realization of strategic targets and guaranteeing ownership equity. In recent years, all the successful or failing cases of listed companies have demonstrated that constructing a reasonable and effective internal monitoring mechanism is not only an evitable guarantee in company development, but also the base of corporate existence and realization of the individual values. Based on the analysis from Management and Economics, internal monitoring mechanism is a joint name of macroscopic institutional arrangements with many stakeholders and multiple internal levels involved. Monitoring can be comprehended as supervision function and controlling function respectively. The exertion of these two functions highlights the perspectives of governance and management respectively, both of which extend different connotations.Although there are few exclusive studies on corporate internal monitoring mechanism, the theoretical circle has done certain research on how to restrain the boundaries of corporate governance and regularize management control behaviors. After analyzing the established theories, this thesis takes the result of analysis as the basis of study. From the perspective of governance, this thesis takes the structural design and function exertion as the focus to review the established theories. Furthermore, it summarizes the theoretical origin and institutional arrangements of management control and internal control from the perspective of management. By combining the established theories, this thesis selects the integrated perspective of governance and management as the perspective of studying internal monitoring mechanism of listed companies and interpreting the operation framework of internal monitoring mechanism from corporate governance and management respectively. Moreover, it constructs a theoretical framework from the integrated perspective. This core penetrates through the whole thesis and constitutes a redeeming response to the theoretical circle’s interpretation of internal monitoring mechanism from a certain limited perspective independently and a brand-new perspective of studying listed companies’ operation mechanism.Since the governance level in a company does not involve specific operation-based business, internal monitoring mechanism under the perspective of corporate governance is mainly reflected as structural arrangements and system design of internal monitoring in the form of internal monitoring mechanism. The operation of internal monitoring in the governance level shall take the existing Corporation Law and OECD Corporate Governance Rules as legal basis, learn from listed companies’ practice in governance and experience in operation and play its role as a dynamic constituent part of corporate internal governance institution. The Board of Shareholders, the Board of Directors and the Board of Supervisors shall supervise in accordance with the relations between entrusted trusteeship and agency by agreement, and exert corresponding supervision function in internal monitoring mechanism respectively to form a check and balance mechanism. This mechanism aims at guaranteeing an orderly corporate governance structure and proper formulation of strategies.Under the perspective of corporate management, internal monitoring mechanism seems to be more specific and explicit. It involves monitoring in the specific operation level, which is centralized on control. In the process of integrating with internal control, accounting control and management control, it forms a management control system whose framework is internal control and a cyclical pattern, namely, planning, execution, detection, evaluation and correction. Furthermore, the four elements, people, finance, material and information, are regarded as the targets of management control to form four core aspects as human resource, financial management, assets management and information management. Dominant and recessive means are adopted respectively to control the detection link which is centralized on working procedure and control point, with the aim to guarantee that all levels and organizations in the management level can operate toward corporate objectives.Just like corporate governance and corporate management are the characters of interdependent corporate systems, monitoring in the governance level and management level will be divided and compared in five aspects due to different perspectives of study: level of entrustment and agency, target of solutions, highlights, subjects and legal category, as well as the adopted means. As both of them exist in this organization at the same time, the boundary determines that monitoring mechanism, either in the governance level or the management level, is a part of internal corporate operation mechanism which shows consistency in objectives, carriers, principles and subjects and realizes coincidence in strategies, internal audit, organizational structure and cultural levels. It is on this basis that the integration of organization objectives and optimization of organization structures are taken as a basis in the proposal of internal monitoring framework under the integrated perspective of corporate governance and management.The index internal control efficiency can be used to evaluate if internal monitoring of listed companies is effective. The establishment of this index system bases on the previous analysis. Through theoretical analysis and practical experience, an index system which integrates the perspectives of governance and management is formed. On this basis, this thesis purifies index with factor analysis and determines the weighted value of each index with weight decision by entropy, and establishes an evaluation system of internal monitoring efficiency and quantitative methods. It is suggested by the result of empirical research that monitoring in the governance level of Chinese listed companies is mainly focused on the Board of Shareholders and the Board of Directors, and the Board of Supervisors is not independent enough and fails to exert significant functions as it is expected to. In addition, organizational objective monitoring and assets safety monitoring in the monitoring of the management level has bigger influence on internal monitoring efficiency. Although internal monitoring in Chinese listed companies has yielded good effect as a whole, it is not balanced and still needs further improvement.Path selection and cross-cultural comparison also exist in internal monitoring mechanism of listed companies. Cultural factors derive from human beings’practice and then react upon social elements, including enterprise. The influence of culture on internal monitoring mechanism is centrally reflected in the governance level. In line with different cultural factors in the locality, three types of internal monitoring---unitary, binary and family monitoring are formed in the world. By virtue of the cultural dimensions theory put forward by Geert Hofstede, this thesis is able to specifically compare and analyze the differences of these three types in monitoring mechanism in the governance layer and their cultural origins. On this basis, this thesis explores paths of optimizing and improving the current internal monitoring mechanism by combining Chinese cultural origins and the origins and growth of internal monitoring mechanism in Chinese listed companies.On the basis of theoretical analysis of internal monitoring mechanism of Chinese listed companies, this thesis combines the facts of internal monitoring efficiency evaluation and puts forward relevant policy suggestions. In the corporate governance level, companies should start by standardizing and perfecting the system of the Board of Shareholders, exerting the core function of the Board of Directors and establishing a specialized role for the Board of Supervisors. Next, they should perfect internal corporate governance structure by perfecting the system and standardizing the construction, so as to create system guarantee for the effective exertion of internal monitoring mechanism. In the corporate management level, companies should start by constructing an organization structure with clear rights and liabilities, fully exerting the role of internal auditing, making plans for a reasonable human resource system and creating integrity-oriented internal monitoring culture. The objective is to make internal monitoring available to each level inside the organization and each business of the companies. In the meanwhile, the integration and transcendence of internal and external monitoring mechanism should be realized to establish a monitoring mechanism together that is suitable for Chinese listed companies.