Research On The Financial Conflict Of Parent-subsidiary Corporation Based On Dual Contracts

In practice, each enterprise group has its own set of rules and regulations to regulate and constraint the behavior of the parent company and subsidiaries. Theoretically, parent-subsidiary should be "mutual cooperation, mutual development". But, in fact, the behavior is very common that the parent company encroaches on the interests of the subsidiary and the phenomenon that subsidiary cheats parent company also happens from time to time. That concentrated embodied parent companies’"Tunneling" and subsidiaries’"opportunistic behavior", and parent-subsidiary relationship is not harmonious ideally. Even if the rules and regulations of the enterprise group are strict, financial conflict behaviors between them are still there. Therefore, in order to study financial relationship of parent-subsidiary and financial behavior of parent-subsidiary, it is not enough only to focus on dominant factors such as the rules and regulations, we should also pay attention to some hidden factors between the two parties.The principal-agent relationship between the parent company and subsidiaries can be seen as couplings of a series of contracts. For the composition of contractual relationship, many scholars have pointed out that contractual relationship is composed of dominant contract and implicit contract. Two kinds of contracts are complementary, and play mutual restraint and incentive roles. Therefore, for financial contractual relationship of parent-subsidiary, implicit contracts are an important part of it. But previous research focused more on ownership structure, the budget management, performance evaluation, the financial right allocation between parent company and subsidiaries and other dominant contracts, and didn’t pay enough attention to contract of group culture, mutual trust contract, mutual loyalty contract and other implicit contracts. Although there is no clear stipulation of implicit contracts, implicit contracts always regulate the parent-subsidiary behaviors, and affecting execution efficiency and effectiveness of dominant contracts. Therefore, when we analyze the generating mechanism of financial conflict, the analysis should be from the perspective of explicit contract and implicit contract, and should not be confined to the dominant contract.It is so vast of the implicit contract content, and there is not a unified understanding of its scope and connotation in academic circles at present. Therefore, this paper tries to find and summarize the commonness of implicit contracts, and grasp the essence of implicit contracts. Through studying the generating mechanism of implicit contract, this paper argues that implicit contracts are from psychological process of framers in essence, and is from a series of "hidden rules" by the framers of psychological expectations. And the psychological expectations of the framers are the core issue of psychological contract theory study, as well as the mechanism of psychological expectations for the contracting behavior and relationship. And by analyzing the relationship of the cultural and psychological contract, trust contract and other implicit contracts, we can find that psychological contract is the core part of implicit contracts. And with close internal connection of rest of the implicit contracts, it can well reflect the essential characteristics of implicit contracts. Therefore, represented by the psychological contract, this paper analyzes formation mechanism and coordination mechanism of financial conflicts from the dual contract perspective.Introducing psychological contract theory to the relationships of this group of the parent-subsidiary, we first need to solve the problem of the organization’s "personification" and organization’s "psychological". To this, first of all, based on the group psychology theory, this paper expounds on that the enterprise has the group consciousness and the subjectivity, and analyzed the generating mechanism of group psychology from; Then combining the theory of law, economics and management, and other angle of view to analyze that, this paper found the psychological contract also exists between the parent company and subsidiary.Based on dual contract perspective, the parent-subsidiary financial contractual relationship can be seen as double contractual relationship which is composed of the dominant financial contract and psychological financial contract.The dominant financial contract refers to that through the company’s articles of association, the form of law such as contract, the parent-subsidiary company stipulate the rights and obligations of each other’s financial, and impacts on behavior are dominant and rigidity; Financial and psychological contract refers to psychological expectations of the rights and obligations from parent-subsidiary companies, and the impacts on the behavior are implicit and flexible. Dominant financial contract is the basis of the generation of psychological financial contract, and psychological financial contract is derivative of dominant financial contract.Parent-subsidiary’s attitude and behavior are influenced by double contracts, and the generation of conflict and whether the relationship is good or bad between them are the results of the two kinds of financial contracts’mutual impacts. Because the dominant financial contracts can be divided into two stages of contracts concluded and performed, psychological financial contracts can be divided into two aspects:one is that the psychological expectations of the allocation of property rights are concentrated on parent-subsidiary "fairness" when concluding the contract; two is that psychological expectations of performance behavior are concentrated on parent-subsidiary "satisfaction". Congenital incomplete dominant financial contract will lead to competition of residual between parent company and subsidiary, and psychological financial contract violation is also the important cause of the conflicts. On contract concluding stage, if psychological financial contract is not equal with dominant financial contract, that will produce the breach of psychological financial contract; when the contract is being performing, the gap between any one’s psychological financial contract and the other one’s financial behavior can cause the violation of psychological financial contract violation.In this article, through designing and issuing questionnaires, I recycle142effective questionnaire copies. Through empirical design and testing, the results of factor analysis showed that psychological financial contracts can be divided into three dimensions which are psychological expectations of decision-making authority, the enforcement of psychological expectations, and psychological expectations of supervision.By dependent samples T test and regression analysis, this paper verified the dominant financial contracts had positive constraints of financial behavior; Higher complete degree of dominant financial contracts helps to reduce the possibility of financial behavior deviating from the financial contract agreement; Psychological financial contracts were derivative from the dominant financial contracts and were influenced significantly by the size of dominant financial contract; The psychological expectations of financial contract are affected by the parent company management control in reality, and will adjust with the enforcement of financial contracts; Exercising rights over dominant contract by the parent company is the important cause of the reducing of subsidiaries’Compatibility; Subsidiary financial psychological contract violation plays regulating role to the process when the parent company’s default results in the decrease of subsidiary cooperation degree, and in which the contracting stage psychological financial contract violation adjustment achieved significance level, and on the performance stage psychological financial contract violation of regulation has not reached significant level.Psychological contract is the internal power to maintain, adjust, control, ensure the parent-subsidiary behavior and the relationship, so the psychological financial contract maintenance can be an effective way to regulate the financial conflicts. Based on dual contract perspective, the cause of the financial conflict can be divided into congenital incomplete of dominant financial contract and breach of financial contract. And according to the circumstances of the psychological financial contracts, the combination of the parent-subsidiary types can be divided into four kinds, and the regulation of conflict from various combinations is also different. Therefore the adjustment of the parent-subsidiary financial conflicts should first analyze the real cause of financial conflict, and judge parent-subsidiary combination type combining with psychological contract, and select the corresponding adjustment strategy. To this, this paper constructed the conflict regulation model based on double contracts, respectively, puts forward the cause and the adjustment measures and the key under the combination of conflict. Under the perspective of psychological contract, the parent-subsidiary financial relationship coordination not only includes the previous research of the dominant financial contract, but also includes the psychological financial contract synergy of parent and subsidiary companies, and the coordination of dominant financial contracts and psychological financial contracts. Therefore, in order to make the parent-subsidiary financial synergies better, we should pay attention to the optimization of dominant financial contracts, the maintenance of psychological financial contract, as well as the interaction between psychological financial contracts with dominant financial contracts.