| 1. Motives and Method of ResearchBy the end of 2001, there had been more than 1100 listed companies, in China, the total value of which was worth of 43522 hundred million RMB, sharing 45.36 percents of GDP. The qualities of these companies have directly affected the development of China economy. Though the research is conducted in recent years, it is limited on the discussion of how to control agency problem. This paper of agency problem by analyzing agency costs and corporate governance, however, discusses the agency problem including the origin, measurement and control. In the listed company, manager has little or no shares. The ownership and control of firm is completely separated. Due to the result of interest discrepancy and information asymmetry, manager does not always act for the shareholders. The amount of company value falls. In " Theory of the firm: managerial behavior, agency costs and ownership structure", Jensen, M.C. and Meckling, W.H. defined this reduction of company value as agency costs. Corporate governance is a system that monitors and stimulates manager to work for shareholders, and then reduce agency costs. The main questions resolved in this paper are how the manager's act is inducted to the direction on the behalf of shareholders' interest by corporate governance and how to improve the efficiency of corporate governance to reduce agency costs of listed companies in China.Following the research of Jensen, M.C, Meckling, W.H (1976), and Fama, Eugene (1980,1983), the write, here, analyzes the agency costs of listed company and corporate governance and compares the corporate governance of America, Japanese, and Germany by positive method. Based on these analyses, the agency problem of listed corporate in China is discussed.2. Framework and Main PointsThis paper consists of six chapters. The first chapter or the preface shows the writing purpose and the major issues to be discussed. It also makes a brief review and evaluation on the theories related to the agencyproblem. Chapter 2,as the theoretical foundation of this paper makes theoretical analyses on the agency costs and governance structures. Chapter 3 with the analyses the corporate governance structures of USA, Germany and Japan, discusses how the listed companies in developed countries control the agency problem and reduce agency costs. Chapter 4 and 5, discuss the practices in China:why the governance structures of the listed companies in China cannot effectively stimulate or restrain the managers, and how we can improve China's corporate governance structures. Chapter 6 is the conclusion. The main contents of this dissertation are as follows:Chapter 2 is theoretical analysis on agency costs and corporate governance. This chapter is the basis of the paper. In section one, a definition of agency costs is given under the assumption that the manager of listed company possesses only a very small if any part of stock shares. Jensen Mecking analyzed the agency costs of a manager who had possessed all of the stock shares of a company at beginning, but then had sold some of them to outsiders leaving in his own hand only an amount enough to ensure his control over the company. The problem is: in a listed company, the ownership is completely separated from the control; from the beginning managers do not hold any share (even they do, the amount is relatively very few). Therefore, due to different constraints on managers, the agency costs are changed.In the analysis the agency costs of a listed company comprise of supervisory costs, incentive costs and residual loss; the amount depends on the preference of managers as well as the efficiency of the corporate governance. Since the separation between ownership and control gives rise to additional agency costs, so why there exist companies as a form of commercial organization? Section two answers this question by analyzing the essence and the causes of the ownership-control separation. Besides benefits in the separation between ownership and control (more exactly, the s... |
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