Supervision Boards Of Listed Companies: Survive Or Not

The principal-agent Problem omnipresent in modern corporations expedites the global corporate governance movements. The problem was born at the time of the divorce of ownership and management, as the information asymmetry lies between the principal and the agent, chances are the latter sacrifices and even the former's interests and pursues self-interest objectives.The principal-agent relationship in modern corporations varies, e.g. the principal relationship of debtors to shareholders, and of shareholders to management, and of minor shareholders to dominant shareholders (outside shareholders to inside shareholders), and etc. The Principal-agent problem varies, and the corporate governance structure follows. Particular principal-agent relationships stand out, and the models of corporate governance differentiate. In the countries represented by Germany, the principal-agent relationships of debtors, shareholders, and employees to management pop out, and bring in the control model governance structure. Under this model, the status of debtors and employees gain extra respect, while shareholders are badly treated. The underdeveloped security market played an important role in the forming of this model. In the countries represented by the U.S., the principal-agent relationships between outside shareholders and inside shareholders and management dominate, thus the market model governance structure came into being. One key factor to the model's forming is the well-developed security market; "shareholder paramount" is the creed of this model. But even if in the same country, the varied structure and character of the companies also lead to different principal-agent problem-the major conflict-e.g., the most obvious differences lies between the listed and unlisted companies.In the history of security market, we can see, as the security market become more and more developed, the principal-agent relationship switch from the Germany style to the U.S. style. The Security market in China is just in the process.The primary method of solving the principal-agent problem through optimizing corporate governance structure is to improve the power allocation, and it involves the power of strategic decision-making, everyday operation, and supervision. This research focuses on the allocation of supervision power in listed companies.The Corporation Act in China gives the supervision power to supervision boards in listed companies, but the boards are badly scolded by the public. Blames and abuses suffuse newspapers and magazines, and researches of academe also found that the supervision boards of listed companies did not work. But after carefully carding, the current paper found that: these researches are often localized in some provinces, such as Hunan Province and Shanghai, or in some domain, e.g. the companies listed in Shanghai Security Exchange, hence can not demonstrate the total functioning status of supervision boards of listed companies in China; the methods employed by the studies are dull, and overly depend on subject matter, thus the persuasion is limited; working details of supervision boards are ignored to some extent, therefore they can not study the functioning of supervision boards measure for measure.This research tries to make breakthroughs in the aspects hereinbefore. Firstly, we deeply analyze the institutional background and function design of listed companysupervision boards, and the power allocation state in Chinese listed company governance structure, and the interests representative, supervision objective, supervision content and working manners of supervision boards. Secondly, aiming at the intending functions, we examined 5 key respects supervised by supervision boards, including operation legitimacy, financial check, committed capital using, major assets purchase and sale and related party transactions, to study the functioning of supervision boards of listed companies. And thirdly, we randomly selected 111 listed companies from the 1088 listed ones at the end of year 2000 for study, and dedu...