Based On System Theory Zgwy Group Design And Perfect The Corporate Governance System

This paper studies the corporate governance of large state-owned enterprises (SOE)from the perspective of system theory and by taking the development course ofcorporate governance of ZGWY Group Corporation as an example, and proposes adesign scheme for the establishment of a systematic corporate governance structure ofZGWY Group Corporation. The analysis conclusion can provide the theoretical guidingvalue to the practical development of corporate governance of SOE under the neweconomic situations.This paper mainly covers the following contents: firstly, it expounds thebackground of the topic, theoretical basis, significance of the study and innovationsmade in the study, that is, the combination of corporate governance of large SOE withsystem theory. According to Economics of Contracts, corporate governance issues willarise in an organization whenever two conditions are present, i.e., agency problems andincomplete contracts. Corporate governance can be regarded as a mechanism formaking decisions on issues which are not specifically provided for in the initial contacts.Its essence is to make a series of contractual and institutional arrangements forstraightening out the principal-agent relationship among the owners, the operators andother stakeholders, thus forming mutual constraint and balance among the interestedparties, namely, to realize maximum interests of the target principals at the lowestagency cost. The basic idea of the system theory is to take the objects of study and theobjects of treatment as an integrated system, then analyze the structure and function ofthe system, and study the correlation among the system, various factors and theenvironment, as well as their law of change. As corporate governance is a systematicproject, it is quite natural to study corporate governance by using ideas andmethodology of system theory. Secondly, it introduces briefly the corporate governanceconditions of ZGWY Group Corporation, particularly the restructuring course andproblems in relation to corporate governance. Thirdly, it proposes a design scheme forimprovement of the corporate governance system of ZGWY Group Corporation. Fromthe perspective of system theory study, the new design scheme is aimed to better the corporate governance system of ZGWY Group Corporation, improve the organizationformed by shareholders, managers, employees, creditors and other stakeholders and setup a mechanism which facilitates the operation of such organization. The saidorganizations and mechanisms mainly include internal organizations, externalorganizations and corresponding governance mechanisms; This paper puts forward adesign and improvement scheme for the corporate governance system of ZGWY GroupCorporation, with its emphasis placed on solving the problems existing in the corporategovernance system of ZGWY Group Corporation, such as irrational ownershipstructure, unregulated internal corporate governance, imperfect mechanisms of selection,incentive and constraint of managers, and insufficient monitoring role played by theexternal governance structure. On the basis of that, this paper discusses the issues ofimproving corporate governance through the internal system and the external socialeconomy system by using the fundamental principles and methods of system theory.