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Research On Insider Control Problems In State-owned Holding Companies Of Our Country

Posted on:2017-01-13Degree:MasterType:Thesis
Country:ChinaCandidate:M LiFull Text:PDF
GTID:2296330488953556Subject:legal
Abstract/Summary:PDF Full Text Request
With the right of management becoming separated from the right of ownership in a modem enterprise, the insider control problem gradually emerged. When the balance between the owner and the manager is interrupted, the problem of excessive power of insider controllers becomes even prominent. Japanese professor Masahiko Aoki first put forward the "insider control theory" in the early 20th century. Chinese scholars followed up to study this theory. This essay, based on existing studies and practical experiences, conducts a systematic analysis on the insider control issue.First part of this essay makes an introduction to certain basic questions concerning the insider control of companies. Among existing studies, the concept of insider control problems is often confused with many other concepts. Therefore, to make clear the differences, the first thing is to figure out what is "insider", "insider control" and "problems caused by insider control". The problems actually are presented in various forms, generally including three categories, the management problem, the financing problem and the personnel matter. These problems altogether cast great influence on the benefits of the company, its shareholders and creditors, and are especially harmful to the company’s profitability and harnessing its sustainable development.After an outline impression of the insider control problems, one more issue needs to be further studied on the relationship between insider control problems and company governance. Compared to the sweeping and complex company governance, the subject of insider control problems is only a sub-branch of the governance tree. The analytical methods of insider control problems not only have its theoretical foundations including the separation of ownership and control and the Principal-agent Theory Agency, but are also based on certain practical problems, such as the absence of supervision and the absent ownership of state-owned holding companies.The insider control problems of state-owned holding companies in China have its own peculiarity. The reforms on state-owned holding companies and supervision mechanism left various history problems. The status of share splitting badly influences the free competitiveness of listed companies. Besides, the appointing of a state-owned company’s directors and managers is clearly in charge of administrative agents, which makes it convenient for insiders to manipulate a company. In recent years, the state has enacted many laws and regulations relating to company governance, to protect the benefits of minority shareholders, independent directors and supervisors and limit the power of major shareholders and the managers. These new rules have been worked out well, but there are still some remaining problems. There remains soil to nourish insider control problems, such as the unreasonable governance structure, the unsound disclosure mechanism and the bad enforcement of laws and regulations.Facing up to these problems, this essay, focused on but not limited to China’s governance measures, analyzes at length the modes of governance in some foreign countries, which includes a mode of outside control represented by UK and USA, a mode of inside control represented by Germany and Japan, and governance of family owned company in southeastern Asian countries. We should not simply copy these modes, but to adopt useful experience to accommodate to our current situation, relying on both domestic and foreign wisdom to avoid insider control problems.The last section of this essay puts forward some measures for solving the insider control problems, hoping these measures would supposedly yield satisfying effect. These suggestions range from optimizing the splitting shareholding problem and establishing investing company to run state-owned capital to enhance the diversity of equities, to perfect the design of governance structure, including a more reasonable salary system, a sound disclosure mechanism, and etc.
Keywords/Search Tags:State-owned holding company, insider control problems, cooperate governance
PDF Full Text Request
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