Discuss The Relationship Between Technology Capital And Corporate Governance

After the reform and opening-up policy which has been executed for30years inChina, the focus of enterprise innovation has started to change from systeminnovation to technology innovation. The same time, management innovation is theguarantee of both system and technological innovation. With the economyglobalization, the urgent task of system innovation and management innovation is topromote the technology innovation. The technology capital is the media fortechnology to transfer into the real productivity, while only the capital can createvalue in the market economy. Under the system of labor wage capital, both moneycapital and human capital assist material capital to create value. However, as thepopularization of information technology and the system of "new economy",corporate profit is made up by not only the human capital, money capital and materialcapital but also the technology capital which gradually becoming the core.Technology capital creates the value directly. Since technology capital together withthe other factors of production such as money capital and human capital creates thevalue, technology capital owners should have the equal right as the monetary capitalowners and human capital owners in sharing the stock of enterprises and thedistribution of the residual assets and profits. Moreover, they should also be involvedin the construction of corporate internal governance directly. Therefore, research onenterprise technology capital and by which induced the change of the corporategovernance structure will become an important subject of financial theory. Moreimportantly, although our country’s total economy is ranked second in the world, butthe self-sufficiency rate of the key technology is very low in china. The foreigntechnology dependence of Chinese enterprise is more than50%, which of UnitedStates and Japan’s is around5%. Besides that, Chinese high-tech key equipments alsomainly rely on import from abroad. How to promote the technology innovationability, to expand independent technology, to combine the independent technologyresearch, technology import and adoption, and to make technology into capital assoon as possible, has become an important issue which must be solved in the processof industrialization of our country in the future. Therefore, this article choosestechnology capital and its relationship with corporate governance structure as thethesis topic, not only trying to analyze from two aspects as theory and practice, butalso striving for a big breakthrough and an innovation on the financial theoryresearch.This paper adopts the normative analysis as the main research method andtheoretical analysis as the main study way. Because of the complexity of the researchproblem, this paper also uses empirical analysis research methods when relevant datacan be obtained. According to the research design, this paper mainly analyzes thesetopics as follows. The first section is the introduction, which proposes the researchbackground, the research topic, the research approaches. Section2is meant to reviewthe literatures about corporate governance, corporate governance and innovation, technology innovation, technology capital and the related issues between technologycapital and corporate governance, by which solved the problem of "what has beendone”. Section3analyses the property right mechanism and accountingcharacteristics of technology capital, solved the problem of "what should be”. Insection4and section5, from the view of the single sample and diversity sample,collecting reliable data, using the case analysis and regression analysis method,discuses the problems of “what is now”. In section6, uses the method of simulationanalysis to determine the price of technology capital, solved the problem of the "howto do”. Section7applies optimization theory to the analyze of the problem of " how todo further".The research significance of this paper lies in:(1) from the point of theory view:created technology capital mechanism theory, explained the basic principles of howtechnology capital generates revenues directly, and enriched the Marxist theory ofcapital, which result in a breakthrough in theory. Further more, it also provides animportant theoretical basis for technology capital allocation and corporate governancestructure optimization.(2) from the point of reality view: built the bridge link betweencorporate governance and technology capital, provided enterprises with systems andoperating mechanisms to transfer technology into practical productivity, carried outtechnology financial management and realized the innovation of financial methods.Although technology is a wildly used concept in people’s normal life, Chinesepeople are far more interested in cultural construction, which easily leading to aninaccurate understanding of technology. In fact, technology is “skills”“knowhow”,which are used during the human production activities, with a form ofartificial products (software), working documents (drawings, articles or reports) andspecial behaviors (operating methods, techniques and balancing act, etc.). Technologyinnovation is a series of activities starting from the idea of new products or newprocess to the research, development and commercial production. Enterprisetechnology innovation develops into technology capital through5steps: theemergence of new industries or new life style, production process, porpertification ofproduct, transaction process and reinvestment in economic activities, etc.At present, China is not only in the pressure of economic downward and excessproduction capacity, but also has to face the problems of a rising costs of production,a lack of innovation, uneven development between urban and rural, and a largedistribution gap of income. In order to get rid of the crisis and to obtain a sustainabledevelopment, relying on technological innovation to create a new economic growthand a new way of development is the only solution, as technology innovation has alsobecome an important strategic issue in the process of transformation of economicgrowth in China. Many companies own a large number of patent, but the patent doesnot transform into capital, which brings a big waste, and there is no technology assetsadopted into the accounting system resulting technology capital played a limitedeffect as role of capital. To take the technology capital as the core and to increase theknowledge capital properly is an effective way to change the economic growth patternin our country. On the basis of the current corporate financial theory, one of the urgentproblems to be solved in the theoretical circle is to establish a feasible factors capital balance sheet which involved technology capital, and then analysis technology whichis adapted into the corporate governance, on which optimize the structure of thecorporate governance.The relation between technology capital and corporate governance is the keypoint of this study. The theoretical analysis part uses the theory of property rights andaccounting theory to analyze the property right mechanism and accountingcharacteristics of technology capital, which is based on the neoinstitutional economics.For a long time, China technology fall behind, for which important reason is thattechnology inventor did not owned the property of the technology. The innovation oftechnology property right system in Chinese market economy is the foundation oftechnological advancement. When people achieved the innovation of technologyproperty right system, the key to the technology improvement is the managementinnovation, which is meant to turn technology into technology capital in both theoryand practice. Technology is a kind of more advanced product of labor. As with otherraw materials, equipment, this kind of products will become one of the living costs forpeople when it is consumed in people’s life. If the product is not consumed in people’sdaily lives, but rather become one of factors in reproduction process, and create valuein the production process of enterprises, then the product would become the capital ofenterprises. Similarly, the technology turning into technology capital is such a sameprocess. The mechanism of technology capital is the key point of this paper intheoretical analysis.In the empirical analysis part, we use the case study and regression analysismethod to search for the correlation between technology capital and corporategovernance structure from the characteristic of single sample and the commonfeatures of multi-sample, as well as their synergistic effect on enterprise corecompetitiveness. Research shows that factors of Board Structure of variable other thanCEO duality have a negative influence on technology capital investment, whichexplains the fact that the board structure of strategic emerging industries listedcompanies rejects the technology capital investment basically. In order to control theboard size, we should put a higher value on quality instead of quantity since anappropriate reduce on the board size will be greatly beneficial for the company’sbusiness strategy; The introduction of independent board basically disagrees with theestablishment of the independent board system of listed company, which indicates thatthe performance of the independent board should be exposed in public to control theindependent board taking action to cater the BS-B; Unlike market analysis committee,strategic planning committee should not be confined to the company’s current orrecent performance, but be responsible for guiding the company’s short-term behaviorfrom the perspective of long-term development planning. The CEO duality has greatlyinhibited the above negative effects, promoting the technology capital investment aswell. There is a causal relationship among those four circumstances that incompetentof members of the board of directors leading to enlarge the scale of the board ofdirectors, then increased the number of board and decentralized function, then set upStrategic Planning Committee, but these people are holding "free rider" mentality,trying to figure out the intent of chief executive to take appropriate action. Thus it can be seen that the working strength of chief executive does not decrease, but collectingall kinds of information to one person could reduce the probability of asymmetricinformation, so CEO duality is not only analysis the problem strategically but alsosupport technology capital investment which affects the future performance. Underthe above conditions, in order to reverse the adverse situation, to reduce the intensityof the CEO duality and do no effect the validity of the strategic decision, we couldintroduce the system of meetings and institution of disclosing minutes.In the simulation analysis part, we adopt the method of the monte carlosimulation to price the technology capital and provide quantitative data to theestablishment of factors capital balance sheet which contains technology capital. Inthe establishment of the model, we considered the complexity and reality. While theobject of case study is just single technology capital project, this study has laid a solidfoundation on technology capital value evaluation for the various technology capitalprojects of a company or companies.Finally, we make an exploratory study in the optimization of corporategovernance structure which contains factors capital. This paper based on Benhabib’sresearch introduces an investment on old technology capital equipments and studiesinvestment behaviors of typical companies on the dynamic framework.The research’s conclusion is that (1) proved the independent property mechanismof technology capital and the existence of technology capital. Technology hasindependent property rights and values, and just like the other factors of production, itis also one of the major factors of modern production with a reality of its finishedcommercialization and capitalization. In addition, this paper also explains thefinancial rules of how technology capital create value, and the accounting features ofvisibility and currency measurability of technology, which reaches the point thattechnology capital could participate in sharing corporate earnings together with themonetary capital.(2) Based on the balance sheet we worked out the corporategovernance research structure and the relation between corporate governance andtechnology innovation, proved the necessity, feasibility and effectiveness oftechnology capital participating in corporate governance, promoted the practice levelof enterprise financial management work and the enterprise managementinnovation.(3) proved the difference between technology capital price and value ofR&D project, obtained the quantitative data of technology capital price. Combinedwith the monetary measurement assumptions of accounting, provided quantitativebasis to optimize the capital structure and the corporate governance structure byintroduced technology capital into factors capital balance sheet.The study shows a strong relation between the technology capital and corporategovernance structure, besides that, the introduction of technology capital into theexisting accounting system based on the factors capital balance sheet is also feasibleand effective. As a result, the optimization of technology capital which is adapted tothe corporate governance has become the development direction of the company’sfinancial activities.