The Research On The System Of Enterprise Group's Financial Control Based On Information Asymmetry

The enterprise group is an economic coalition of multi-legal person, which is featured by multi-trust and agent relations, taking capital as a means of originally binding for main tie, and the relations between parent company and subsidiary company is the main one. So, the financial control of the enterprise group is different from single enterprises to control. The parent company of the group can only rely on the holding rights to control the subsidiary company indirect and emphatically.Traditional economics carry on the research of enterprise group's financial control under the assumed conditions with totally symmetrical information, but the actual conditions is that the information among the parent company and subsidiary company is not totally symmetrical. As the general manager of the subsidiary company, he always privately owned more information than parent company of the group, for example, his own management ability, his own hard-working degree, as well as the external environment condition and the inside condition that the subsidiary company is in, and so on. Because the subsidiary' s general manager has information advantages, he may makethe egoistic behavior but which is harmful to the parent company of the group. To the adverse selection and the morals risk emerging from this kind of asymmetric information, the parent company of the group must design a kind of incentive mechanism while taking measures to restrain, so that to meet with the participation constraint and the incentive compatibility constraint. This way, the general manager of the subsidiary company can realize the group' s maximal interests while realizing his own goal of interests. According to group's financial practice, the asymmetric information between the parent company and the subsidiary company can be divided into two stages, namely, the parent company of the group sends out financial orders stage and the subsidiary' s general manager feedbacks the implementation stage. To the parent company, which is the subject of the control relation, its main task in the first stage is to employ the qualified subsidiary general manager and determine the rational task to him. In the second stage, the parent company' s main task is to prevent subsidiary' s general manager from tricking the financial statement, and guarantee the information feedback from the subsidiary is true and effective. Through the analysis of the information asymmetry in the financial activity of enterprise group, we can know that the information asymmetry exists definitely. In order to weaken the information asymmetry, the parent company of the group must design a set of effective financial control systems to make the control on the subsidiary's general manager more systematically. I think, the financial control system' s design under the information asymmetry should be considered from two respects, namely, the framework of the control system and the selection of the means. Particularly, the framework should including the power' s distribute, the structure of organization design and the mechanism' s arrangement The selection of means should include three links, namely, the in advance, theneutralization of the activity and the afterwards. The methods in advance mainly have budgeting control, risk pre-warning control, authorizing control, incentive control, the neutralization of the activity control methods mainly have the mechanism of Financial Controller, the calendar program control and the audit control. The methods of afterwards control is mainly to examine the performance, and carry on the proper rewards and punishments to the result of appraisal.