Abstract: In this paper,the model has been constructed corresponding to the present situation of corporate governance mechanisms in ChinaWith game theory,it is proved that the efficiency in corporate operation will be affected seriously by the governance mechanism in which the Government is involved excessivelyWe consider that the Government should withdraw State-owned property from industries as soon as possible and it should be a most urgent task at present to eliminate barriers of property rights in reformed state-owned enterprises

Key words: corporate governance, agency problem, game-theoretic analysis