Based On The Principal - Agent Relationship

The development of the state-owned economy means much to China, in the sense that it not only guarantees the steady development of national economy, strengthens the overall national strength, realizes the vast basic welfare of the people, but also consolidates and develops socialism system, strengthens great unity of people of all ethnic groups in the country, and guarantees the long- term stability of the Party and the Country. State-owned and state holding enterprises occupy very important position in the whole national economy, The development of the state-owned enterprise influences the general macroeconomic level. Therefore the SOE reform has been a key link of the economic system reform of our country.Since 1978, the SOE reform has gone through several phases, from granting authority, allowing keeping a bigger share of profits, switching profit delivery to tax payment, the setting up of contract system, modern enterprise system, to debt-to-equity swap, etc. The focus of the reform concentrates on the circulation of the state-owned stock, transfer of the state-run property rights and perfect company's administration structure currently. The reforms of every phase had adjusted around the relation between the country and state-owned and state holding enterprises, adjusting commission agent relation between the state and state-owned and state holding enterprises, and the controlling mode adopted. This paper comes up with the conclusion that the particularity of agent relation induces serious agency problem in state-owned enterprise, which causes relatively lower efficiency in state-owned and state holding enterprises than that in private enterprises which represents the private property rights. Most of the assets of the state-owned enterprise belong to state- run assets. The state-run assets are the public property rights, which cannot be dispersed to an natural individual person. The whole nation owns it. These assets cannot be owned directly by individuals, and the benefit of these assets cannot be divided directly to individuals either. There is no strong tie between the public property rights of state-run assets and the citizen's individual interests. It is impossible for everybody to manage state-run assets. Therefore there must be a state-run representative to be made to manage state-run assets on behalf of all people. According to the regulation of the constitution of China, the representative of the state-run assets is the State Council. The State Council is the part of the government, and the government only can manage state-run assets under the order of the government's institutional framework and administration means. Thus the answer to solve the inefficient problem of the state-owned enterprise lies in the study of the particularity of agent relation in the state-owned enterprise. On one hand, it's the gradual process of the agreement under the circumstance with fixed relations between ownership and management, changing the original policy commission nature, establishing market-based clientage. On the other hand, the two aspects of the state-owned enterprise reform directions complemented each other.Commission agent relation is the converging subject matter of this paper. Commission agent relation evolves as economic development. The development of the modern capital market made fundamental changes on the commission agent relation, There are complex multi-agent levels Form initial contributor to enterprise management. The span between initial investor and the final management caretakers widened. Since the state-run assets are the public property rights, which cannot be dispersed to a individual natural person, the natural commission agent relation arise, which means larger space of the relation. As everyone knows, the society will not fall back, it will always move along the road toward. We should realize that the commission agent relation is the more valid agreement relationships under some restraint terms. It is the effective way to seek the solution of agent problem through...