The Character Of Property Rights Of Entrepreneur's Human Capital And The Structural Arrangement Of Corporate Governance

If the mainstream theory in corporate governance is that the stockholder has an authority in the capitalist society, in the socialist society based on the theory of labor value, the central theory of corporate governance should be that the owners of human capital have a power in the firm. But in fact the institutional arrangement of corporate governance structure has a reverse current in the real word. On the one hand, the representative economists, as Rajian and Zingales, find that some people owning key human capital have obtained ownership of firm in the background of knowledge economy and information economy. On the other hand, in the course of the reform of SOEs' corporate governance, the government always emphasizes that the state own SOEs only because their physical capital is owned by the country. Why is there an inconsistency between two kinds of theories?The different views on the nature of the firm cannot but result in different theories of corporate governance. This article will try to resolve the above inconsistency by reconsidering the nature of the firm from the point of view of property rights. The author thinks that property rights of entrepreneur's human capital are naturally private but not negotiable. As a result, the nature of the firm is a device to make value of property rights of entrepreneur's human capital to be true so that the entrepreneur should have the ownership of the firm. The core of corporate governance is to build mechanism of conversion between human capital and physical capital encircling the human capital of entrepreneur.This article is constituted of four chapters. The first chapter puts forward issue and summarizes literature. Literature search is evolved to show the relation between human capital and ownership of firm. The last chapter is some simple conclusions.The second chapter is the base of theory about this thesis. The author demonstrates the inherent relation between the character of property rights of entrepreneur's human capital and the institutional arrangement of corporate governance structure. The author thinks that property rights of entrepreneur's human capital are naturally private but not negotiable. They are naturally private because marketing ability of entrepreneur adheres to the body of entrepreneur. They are not negotiable because the first mission of entrepreneur in the market is to decide what to do and how to do. It is said that entrepreneur must take some action, such as constructive destroy or judgmental decisions. The value of their ideas cannot be directly measured by standard model. In order to test and realize the kind of extremely scarce human capital of idiosyncrasy, we need a series of institutional arrangement. That is the firm---the nexus of contracts. The firm is the combination of inherent contradiction of characters about property rights of entrepreneur's human capital. It may make value of property rights of entrepreneur's human capital to be true. That entrepreneur obtains ownership of the firm is a necessary choice to resolve this kind of contradiction. It means that the symmetrical arrangement of corporate governance between residual claims and residual rights of control could restrict and promote entrepreneur. In the same time, emergence of residual rights predicates that other contractual power must be protected by contract, which is the mechanism of corporate governance. Main ways of corporate governance include free contract, credit and law, competitive market and private property rights. Because of the difference of intensity and effects in the course of establishment and implementation of these kinds of mechanism, different model of corporate governance is formed.Mechanism of corporate governance reflects the strain between authority of entrepreneur and price mechanism, which makes market run and is a vigorous resource in market economy. The marketing ability of entrepreneur is critical to the foundation and development of the firm. The concrete of this ability makes productivity of the firm, which becomes...