On July 6th, Beijing News Shell Finance held a forum on the high-quality development of the capital market in Changsha, and Tian Xuan, deputy dean of the Wudaokou School of Finance of Tsinghua University and member of the listing committee of the first CHINext board of the Shenzhen Stock Exchange, made a keynote speech on "China Corporate Governance".
The data shows that between 2003 and 2020, more than 99% of listed companies had at least one controlling shareholder with a shareholding ratio of more than 10%. Under the high concentration of corporate ownership, "the conflict of interest between major shareholders and minority shareholders is the main contradiction in Chinese corporate governance." Tian Xuan said.
"The equity of listed companies is highly concentrated, and China's corporate governance relies on the government and supervision, rather than the market-oriented incentive mechanism." Tian Xuan pointed out that behind it also reflects the shortcomings of the internal and external governance mechanisms of domestic companies. However, he also said that domestic corporate governance still has a lot of room for market-oriented development, and suggested that in the future, we should pay attention to several directions, including a very active enterprise control market, "barbarians at the door" can help improve corporate governance; pay attention to the heterogeneity of controlling shareholders, the corporate governance of unlisted enterprises, and how corporate governance has promoted the development of Chinese enterprises and China's economic development in the past few decades.
Talk about the problem: There are deficiencies in the internal mechanism and external mechanism of corporate governance in China
Talking about the problems in Corporate Governance in China, Tian Xuan pointed out that the supervision mechanism has little effect, the incentive mechanism is insufficient, and the external corporate governance mechanism is not effective.
For example, in terms of corporate regulatory mechanisms, the internal governance and regulatory mechanisms of companies in various countries in the world mainly rely on the board of directors, and the board of directors relies on independent directors. However, China's independent directors have not really played the role of supervising the major shareholders, and a very important reason is that China's independent directors are appointed by the actual controlling person, and there are very few neutral independent directors.
"Only 4.3 percent of Chinese listed companies have more than 50 percent of independent directors holding board seats; only 6 percent have voted against it at least once, and 92 percent of those decisions that have been opposed have passed." Tian Xuan cited the data. In addition, the supervisory boards of many companies are useless because they have no real power. Slightly encouraging news is that the overseas professional experience of board members with overseas backgrounds has put them in the role of one of the few effective supervisors.
Institutional investors and financial intermediaries are also important players in corporate regulatory mechanisms. However, Tian Xuan pointed out that China's institutional investors cannot effectively implement their supervision functions due to the short investment period, and the professional level of financial intermediaries also needs to be improved. He mentioned that stock analysts usually provide biased reports on companies that are contracted by their institutions to issue and list, and the information disclosed by the controlling shareholders cannot be effectively screened.
The incentive mechanism of most enterprises in China is not full enough. Tian Xuan said that the core of the incentive mechanism is to link management compensation with corporate performance or stock prices, including (high) wages, performance rewards, stock options, severance compensation and so on. The incentive mechanism of the vast majority of corporate executives in China relies only on salaries and bonuses, basically no stocks, and more than 65% of listed companies have never launched equity incentive plans.
Look at development: There is still a lot of room for high-quality market-oriented development
"What does corporate governance in China depend on? It is a strong government supervision, and a series of laws and regulations. Tian Xuan said.
He listed a series of laws and regulations to strengthen investor protection in China since the 1980s, including the Accounting Law promulgated in 1985, the Bankruptcy Law in 1986, and the Company Law, Securities Law, Contract Law, property law, etc. "The introduction of these laws and regulations has improved the level of corporate governance." Tian Xuan said that the intensity at the implementation level has also been continuously improved.
However, a high-quality market should play a more important role in the market and reduce unnecessary administrative intervention. Tian Xuan said that for example, whether a company pays dividends, if this kind of thing is also required to be enforced by regulators, it is not actually a healthy and mature market performance. "I think there is still a lot of room for market-oriented development and high-quality development of domestic corporate governance." he said.
Suggestion: "Barbarians at the Door" can improve the level of corporate governance
How to strengthen corporate governance, Tian Xuan suggested paying attention to several directions in the future.
One is that there must be a very active market for corporate control, that is, hostile acquirers, and these "barbarians at the door" can help improve the level of corporate governance.
The second is the heterogeneity of controlling shareholders, that is, what kind of people the controlling shareholders are and what role they will play in listed companies.
The third is how the law and its enforcement play a role in corporate governance.
The fourth is the role of banks in corporate governance. At present, China's large banks are almost state-controlled, with the function of macroeconomic relief to help enterprises in difficulty and ensure employment, and the role of banks in corporate governance in the future is also very important.
Fifth, the corporate governance of unlisted enterprises, we are now paying more attention to listed companies, but behind them are thousands of non-listed companies, today's small and micro enterprises may be tomorrow's listed companies.
Sixth, the relationship between corporate governance and corporate performance and stock market performance can be mapped to performance improvement and stock price improvement.
Seventh, the exogenous impact caused by regulatory changes such as laws and regulations should receive wider attention.
Eighth, how corporate governance has promoted the development of Chinese enterprises and China's economic development in the past few decades. We can summarize what laws can be summarized so that in the next 5 years, 10 years or even longer, we can improve the level of corporate governance in our country.
Beijing News shell financial reporter Cheng Weimiao Gu Zhijuan Editor Chen Li Proofreader Fu Chunyi
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