State-owned Companies Outside Directors Monitor Efficient Way

State-owed company in China is quite different from other normal company, with the responsible of protecting state-owed from declining. It has acquired extensive agreement that outsider director can be used as a valid measure to corporate governance and be used to balance the executive directors and management layer. As an effective method to improve and perfect corporate governance structure, the outsider director institution has been paid more and more attention to. The outsider director institution is a unitary model system to prevent internal members from abuse of power, and thus effectively protect the legitimate rights and interests of company as a whole and strengthen monitoring to managers of company by reducing agency cost and overcoming internal control from insiders.This paper is addressed to find the methods to improve the monitoring efficiency of outside directors. Based on the unique features of China State-owed company outsider director institution, the methods of improving monitoring efficiency of outside directors could be available from three angles. The first, the outsider director must be looked on as an economic person. His request for benefit should be acknowledged. And the outsider directors'incentive is a hard nut to crack because of their special duties in state-owed company. Protecting state-owed assets from being ruined by outside directors is necessary. The second, selecting the right persons to be outside directors is the critical base stone for improving monitoring efficiency of outside directors. And the last is the incentive mechanism and regulation and rules system. Research on incentive mechanism of the outsider directors in the state-owed company still stays around the norm research stage.