The Mechanism Of Internal Corporate Governance

Corporate governance is an important systematic safeguard of enterprises to breed and develop their core competitive power in order to acquire competitive edge. To some extent, the competitive power of enterprises directly determines a country's competitive power, and some studies have established that the big gap between Chinese and foreign enterprises with regard to market competitive power is fundamentally caused by the great difference of the their standards in corporate governance, thus, a study on this topic is of major theoretical and realistic meanings. The author holds that corporate governance includes two aspects --internal and external corporate governance, and the former is the key issue. Through the research of its mechanism, this article is to explore the problems in internal corporate governance of the Chinese enterprises and try to provide with relevant solutions. The methods of comparative analysis has been applied in this article and the framework of which is divided into four chapters. The first chapter deals with the basic theoretic issues of corporate governance and paves the way for the exposition of the coming three . The second one introduces the mechanism of internal corporate governance, that is, the relationship between organizations of the corporation, which is also the key matter of it. The third one is the comparison between two major modes for corporation governance, the British-American mode and the German-Japanese mode, and a conclusion that there is the tendency of identification is given therein. The fourth one lists out the major problems of the corporate governance in China and put forward relevant solutions by connecting with our present practice. In the author's point of view, there is neither fixed mode nor unified standard to follow in corporate governance, because the historical background and legal culture differs in each country. Provided that a mode is adoptive to the country's status within a certain period of its history and gives solution to the major problems in the corporate governance, then it is a good mode. By linking with the legislative situation of each country, the author also introduces the apparent difference between the two major modes and concludes that there is the tendency of identification in the mechanism of corporate governance, the purpose of which is to spot the common problems and developments in order to provide with references in corporate governance for our own country. The author holds that main complex in our corporate governance is the improper stock equity formation, and the other problems, such as the Board of Directors'lack of independence, the lack of supervision and the control by internal personnel, are all closely related to this present manner of stock equity formation. Therefore it is of the first degree to solve the problem of stock equity formation before seeking to improve our corporate governance. Under the condition of "one share in preponderance"and "stock equity classification", the other well-planned systems can not be brought into full play and on the premise of this idea, the author submits the relevant solutions to other problems in corporate governance of our country also.