China's Internal Control And Legal Regulation Of Research

"Insider's control" issued in transition economy has become the realistic and sever problem during the transition economy state company's controlling. Accompanying enterprise's reform of our country, there comes "insider's control" and it can't be solved effectively and has already become an enormous obstacle in deepening of enterprise's reform. The cause is quite complicated .The client of the state-owned enterprise of our country is "country" (government) but not natural capitalist, the government appoints, supervises and restrains executives, and finance for enterprise's project. This means there are enormous hidden dangers in the administration mechanisms of enterprises. First, investors of enterprise are outside people completely and have no inside owner at all. Owners are separate totally from administrators, and managers have no mortgage among enterprise. Directors abroad usually hold quite a lot of shares and become the inside owners of the enterprise. Second, because country is a fictitious participant but real participant, commission right of state-owned enterprise must be authorized and offered to the government official. In fact, the control power of the property right of the state-owned stock concentrates is owned by government official's, but the right of asking for surplus of enterprises is belong to the country, these officers are not the persons who asks for surplus, the right of asking for surplus and the control power separate from the beginning. Third, because of the constant enlargement of the decision-making power of enterprises in the course of reforming, the control power of fact of company executives is increasing, the stakeholders concerned of these reforms seek the actual surplus out of the contract's stipulations by means of the power in hands. Fourth, because company's incentive mechanism is not perfect, executives' legal income is obviously on the low side, the natural instinct of " economic people " induce them to take non-ethical way to meet personal maximization utility. It is exactly a reason based on these subjective and objective respects, it is very general to cause the "insider's control" in the company of our country and it is an outstanding problem that must be put forth effort to solve in the reforms of the administration structure at present.In the course of our country's economy turning to socialist market economy from planned economy, the "insider's control" extremely damages the rights and interests of owners, and it brings out economic conducted out of shape such as, the state-owned assets draining on, the interests of the small-mid shareholder's aggressed, managers' rotten actions etc.. Theseinstall much hinder for further reform of the state-owned enterprises. Meanwhile it's not benefit to these companies establishing the modern enterprises system. The causes of this "insider's control" are considerably complex. For example, the system of agency of agreement has some defects itself as follows, the incompleteness of the contracts, asymmetric information and positive supervisor cost. The stockholder's equity is unreasonable, and the mechanism of company is not perfect. In order to perfect Company's administration structure and solve the problem of "insider's control", it is very essential that we should combine the actual conditions of enterprise's reform of our country, use the basic principle of the modern enterprise's theory and analyze the reason of "insider's control". Use the comparative analysis method to explain the main characteristic of the control mode of two kinds of companies of Great Britain and America and Germany and Japan, use the experience in controlling inside people of developed country for reference. Firstly we must set up the stockholder's equity structure of pluralistic which the legal persons hold concentrative the stocks in moderate degree, secondly we should put the relations of the principal-agent in order, thirdly perfect the govern structure and mechanism of these companies inside, and strengthen restrict mechanism outside, then we can settle the insiders control step by step. These are of great realistic importance to perfect the company administer structure and mechanism, and to improve govern capacity and govern efficiency.