Research On The Corporate Governance Of Security Corporations In China

The securities market in China has experienced great changes since its foundation: from speculation to investment conception, from the crazy bull market to the depressed bear market. Under such circumstances, the securities corporations have also seen the fluctuations during their growth. They have tasted not only the sweetness of rapid growth, but also the sorrow at bottleneck.Many problems arose during the growth of Chinese securities corporations, such as the deficiency in ownership and excessive insider-control derived from over concentration in state-owned equity; the ineffectiveness in execution of corporate governance despite of its perfect form. Therefore, it has been the top priority of securities companies'innovative development to improve their corporate governance. This paper aims at the corporate governance of securities companies, analyses the problems existed in corporate governance, researches on the equity structure, and corporate governance structure and incentive mechanism of securities corporate. The paper also brings forward some constructive suggestions of the corporate governance based on the mature experience of western securities corporations, as well as the current situation in China.With regard to the corporate equity structure, although theoretically, the problem of over-concentration in equity could be solved by withdraw the stated owned capital, multiplied equity structure and public listing; the practical feasibility is not sufficient. The empirical analysis of Kemin Zhu, this part innovatively brings forward the point that it is more realistic to maintain concentrated equity controlled by state owned capital than private capital. Gradually, the private capital can have more and more participation in the equity of securities corporations; therefore, a multiple equity structure can be formulated. Concerning the corporate governance structure of Chinese securities corporations, they are perfect in form, but lack of the execution and balance mechanism. Hence, this paper suggests that the function of board of directors should be reinforced, especially the independent directors; the function of board of supervisors should also be enhanced.As for the incentive mechanism, this paper identifies its significance to the regulation and sustainable development of security corporations. At present, those corporations do not have enough regulated and effective incentive methods. They emphasize more on the short-term incentive rather than the long term incentive. The paper brings forward some suggestions of the incentive mechanisms, including improving the salary structure, increasing the proportion of risk-reward in the total remuneration, enhancing equity share incentive, as well as more intangible reward in addition to the tangible reward.