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Economist Calls for Establishment of Three Mechanisms in China's Capital Market
On the Ping'an Securities Capital Market Forum held Monday, the famous young economist Han Zhiguo delivered a special-topic speech, in which he called or the urgent establishment of competitive, restrictive and stimulative mechanisms in China's capital market.
He pointed out that due to the intervention of administrative mechanism and the failure of the market mechanism, the phenomenon of " transformation of form and no transformation of mechanism" universally exists in listed companies, most of which are out of the transformation of state-owned companies.
As most of the state-owned shares are in the status of " nominal property rights" and " absent ownership", the original responsible departments of the listed companies can intervene in the enterprises in the name of the representatives of share-owned shares without bearing the responsibility for the result of the intervention.
In particular, the holding shareholders of listed companies undertake the whole responsibilities of decision-making, execution and supervision, making the asset counterbalance mechanism required by or intrinsic in modern corporate system nonexistent or existing in form only. Therefore, the restrictive mechanism of China's listed companies needs to be set up urgently.
With regard to the stimulative mechanism, Han said that in the nations with developed market economy, a stamulative mecahnism which combines the immediate reward (salary+ annual bonus) and long-term reward (stock options + restrictive shares) is widely adopted by listed companies.
The situation in China is in sharp contrast to that of the nations with developed market economy. Only by establishing effective binding and stimulative mechanism, can the market coherence and market competitiveness of China's listed companies be strengthened, he said.
Source: Panaroma
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