China's State-owned Listed Companies Financing The Principal-agent Problem

In the process of financing practices of China state-owned listed company, there are many abnormal aspects deviating from the traditional financing theory. Based on the principal-agent theory, this article is dedicated to find out the specialties about the principal-agent relationship in China state-owned listed company and discover the multitudinous principal-agent problem of financing. After above study, this article tries to construct a financing analytical framework according with the specialties of China state-owned listed company, then uses the framework to explain and forecast the financing practices. Finally, this article provides some advices to control the principal-agent problem of financing. This article is prepared to illustrate the idea from the following five parts:Part one: Principal-agent Theory and FinancingFirst, this article points out the existence of principal-agent relationship through the analysis of the transformation of corporations form. Because of opportunism, small number condition, information asymmetry and contract imperfection, principal-agent problems are existed. Through many years' research, the West has produced a series of corporate governance mechanisms to control these problems. In the same way, there are also many principal-agent relationship and problems in financing. Then this article reviews the principal-agent problems and some financing theories, consequently a question has risen: can such financing theories and west corporate governance mechanisms be applicable in China state-owned listed companies?Part two: Principal-agent problem in Financing of China State-owned Listed CompanyThrough comparing, this article indicates between China state-owned listed company and West Corporation there are many distinctness in principal-agent relationship, which results in the specialties in financing of China state-owned listed company. Then this article discusses concretely not only the agent problems but also the principal problems. Eventually, this article raises a question that can thecorporate governance mechanisms of China state listed company control the above problems? So the existent problems have been given the answer: No. Then what are the corporate governance mechanisms of China state-owned listed company?Part three: Corporate Governance Mechanisms of China Sale-owned Listed Company and the Hypothesis of Insider FinancingThrough analyzing the corporate governance mechanisms of China state-owned listed company, this article gets such conclusion: it exists widely insider control in China state-owned listed company. Then, this article indicates that the west traditional financing theories can not explain distinctly the financing practice in China, accordingly, under the basic hypothesis of maximizing insider utility this article constructs a financing analytical model to form a framework which accords with the specialties of principal-agent problems of China state-owned listed company.Part four: Control the Principal-agent problems in Financing of China State-owned Listed CompanySince there are not only principal problems but also agent problems in financing of China state-owned listed company, so we should control these problems from two aspects: establishing and improving the outside market mechanisms, improving the inside corporate governance mechanisms. First, this article begins with the revolution of property right system, because these above problems mainly due to the property right system of state-owned listed company, state-owned banks and non-bank financial organizations. Second, we should derive fully from the distillate of west corporate governance mechanisms, then establish and improve our state-owned listed company's inside and outside mechanisms.Although I tried my best to closely combine financing theories with our current situation, this article must have many shortcomings due to my theoretical limits and practical experience. I sincerely anticipate specialists' guide.