The Study On Financial Control System Of The Conglomerate From Perspective Of Financial Governance

Enterprise group (Group) is one of the important organizations deriving from the market economy,which is one basic form to accomplish customs'value chain,with disreplaced advantages in market competition. Enterprise group is formed based on the relations of property rights connecting its member companies,forming entire target and playing entire functions,which needs necessary conditions of allocating the financial resources owned or controlled by it. So,the financial controlling of enterprise group is one of important researching branches in domestic acadamic groups of finance.Part1The member companies of group is an independent economic body to make decisions and operate their resources by themselves, with independent certification. It is the fundmental institutional coindition which must be acknowledged and followed while studying group's financial controlling,but usually ignored in most researches. From the angel of group company, group's financial controlling can be divided into two basic parts, one is that of group company to its dependent parts, such as researching centres, which is based on the administrative orders from its management group's authorities; the other is that to its subsidary companies ,based on its position of ownership derived from its property rights, which is performed indirectly through the Financial Governance Structure(FGS)of its member enterprises. In fact, the later is the main part of group's financial controlling.Based on the analysis above, the financial controlling of group is not broadened simply from that of enterprises. Some principles should be followed while being carryed out: 1)the group company should performs financial controlling to its subsidary companies mainly through leading the integrating of their financial goals induced by economic sectors and forming an entire financial goal oriented by all the member enterprises of the group. 2) the group company should adjust its share of equity investments to its subsidary companies and its derivative affecting in their FGS, according to group's entire strategy and target. 3) the group company should ensure its affecting in accordance with its portion of property rights in the member enterprises, through constituting stable institutions.Part2The core and basic content of financial governanc is the allocation of enterprise'financing rights between its bodies of property rights, which forms the institutional framework to ensure the promotion of enterprise'entire benefits and its reasonable and equitable allocation between its bodies of property rights and financing rights. Thus, the financial controlling of enterprise group should take its member companies'FGS as its institutional basis, the group company should put out its fair influence in its member enterprises'FGS to control indirectly their processing of financial decision-making, carrying out, and monitoring, but not to perform their special financial activities. It is very important to Chinese enterprise groups which usually mixed its member companies'business, financing affairs and human resources together.Financing rights is derived from property rights, it can be regarded as the inflection of property rights onto enterprise's financing affairs, so the role and function of group company in its subsidary companies'FGS is decided firstly by its share of equity investment to them. Group company should delibrately design its structure of equity investment among different industries and adjust it dynamicly, led by group's strategy and target.What's more, group company should design and adjust the organizations, procedures, methods and other sectors necessary for the operating of FGS in its subsidary companies, which is to ensure its maximal effects of financial governancing rights. Of course, there will be different special demands to different subsidary companies, such as that of full share, most share and participant share, which was analysized systematicly in the dissertation. The conception of financial controlling based on financing rights, and the framework or model of financial controlling based on financial governance, are the main characters and inherent basis of group's financial controlling, which can be embodied in other parts of the system.Part3To select the model of enterprise group's financial management system, not only the advantages and disadvantages of different degree of concentration of group's financial governance rights, but also the feasibility from the structure of equity investment should be considered. That is to say, the model of enterprise group's financial management system is determined chiefly by the allocation state of its financial governance rights, including financing rights of decision-making, carring out, and monitoring. Certainly, group's organization structure, developing stage and stratety, industrial characters, culture, geogaphical distribution and other factors should also be delibrately considered.The institution of enterprise group's financing leading cadres, is an important part of its financial management system, which should be involved in two classification, 1) that of group company, which is mainly designed for group company's direct financial controlling. There are two basic models about it, one is the institution of General Accountant(GA), widely used in Chinese state-owned enterprises or companies; the other is that of Chief Financial Officer(CFO), widely used in American and Europe companies. GA and CFO are both member of enterprise's management board, GA just play a subsidary role to its general manager, while CFO is one strategic partner for him. 2) the institution of Financial Supervisor(FS) used in group's subsidary companies. FS is assigned by group company to its subsidary companies, mainly for monitoring their managers.Goup's budget management is to embody its financial management system. In the model of high-degree concentration of financing rights, group company is the drawer and organizer of group's total budget. While in the model of low-degree concentration, it is just the approver and monitor of budgets. The basic process of budget management can be divided into two stages, firstly determine the entire target of group's tatal budget, then divide it among its member enterprises according to targeted earning rate of assets or capitals. About the problem of budget relaxing during the course of bargaining, we analysized on emphasis the model of"method of determining unite base".It is very important for lowering group's entire risk to controll its funds. In this dissertation, we analysized and compared the models of concentrating management of group's funds by its department of finance, such as:1)managing its incomes and expenditures as a whole; 2)holding some provision as authorized level; 3)setting up centre of clearing; 4)setting up internal bank. Then ,we analysized some models of providing financial service open to outsides, including financing company, insurance company, trust company and security company. Based on comparing their advantages and disadvantages , we predicted the trend of financing company from the angels of institutional regulation and actual demands, and considered it the best model of funds management for Chinese enterprise groups. In the view of new institutional economics, enterprise group's financial controlling can be regarded in essence as a sort of trust -- agent relation and its movement, which will bring the agency problems into being, such as"adversarial selection","moral risk"and so on, so it is necessary to design a set of effective financing mechanism to activate and constrain the agents. The activating mechanism is to make trustor's goal and agents'goal compatible, postively relative and optimized. The constraining mechanism is to minimize the total of constraining cost and agent cost. It is necessary to take accurate performance appraisal as the base of feedback controlling, so we explored the whole framework to appraise the member enterprises'performances. While constructing the framework, we selected Economic Value-Added(EVA) or Residual Economic Value-Added(REVA) as the core target representing the processing level of group's strategy, which is oriented by four sections including finance, market, internal business processing, and enterprise'innovation and study.Part4Based on the constructing of group's financial controlling system, we study some relative problems happening from chinese state-owned group's financial controlling, and provide some suggestions to improve the conditions. Firstly, the FGS of state-owned groups should be promoted based on the evolution of their ownership or equity structure. We analysize the reformation of group company and its subsidary companies.Then, after analysizing state-owned groups'natures of property rights, scale of operating and managing, industrial characters, developing stage and strategy, organization structure, culture, and so on, we suggest them to select the model of relatively high-degree concentration of their financing rights. As the institution of financing leading cadre is concerned, to group company, what is important is not to change the name of general accountant into CFO, but to make its GA have compatible duties, rights and benefits, which will change his role of advisor into that of direct decision-maker in the field of financing and accounting. While to its subsidary companies, the model of financing supervisor can be selected according to special demands.Part5During the course of the researching in this dissertation, we get some researching results, possessing some innovation in some degree, mainly as following:1. We divide enterprise group's financial controlling into two basic parts, one is the internal direct financial controlling in group company, the other is the indirect financial controlling to its subsidary companies through their FGS, which determine the framework of group's financial controlling more clearly.2. We study enterprise group's financial controlling in the view of new institutional economics, integrating its financial controlling and financial governancing into our study together, and form its controlling system based on its FGS. Relative to most existing researches focusing on the section of financing techniques, we mainly research it in the section of financial institution.3. We explore the field of controlling the operating of the FGS in group's subsidary companies systematicly, which will be helpful to performing indirect financial controlling in group's institutional framework.4. We analysize the horizontally and vertically curving up and allocating of group's financing rights comprehensively and systematicly, which will be helpful to the study of financial governance.5. About the appraisal the performances of group's member companies, we set up a model , which can be named"appraisal framework like a tower", taking EVA or REVA as its core target, oriented by four basic sections including finance, marketing, internal business-processing and enterprise's innovation and studying. The model will be helpful to control subsidary companies'developing conditions from group's whole stratety.