Comment On Owner's Financial Control Under The Model Of Entrusted Agency

In the traditional enterprises, there isn't the specialized owner's financial control. Because ownership rights and management rights are unified, the financial control of enterprises also refers to the owner's financial control. Financial control aims at realizing the owner's profit maximization. Under the separate condition of the two rights, because of the entrusted agency relationship between the owner and the manager, inconsistency between their financial aims resulted in the agency problems, such as agents'adverse selection and moral hazard, etc.. In order to minimize agency problems and agency cost, all the owners must establish a set of complete financial control system to control the whole business activities of the business operators, and ensure the profit maximization of enterprises. This paper focuses on researching the problems of owner's financial control under the model of entrusted agency. Based on the early researches, using the theories of property right, entrusted agency, corporate governance and financial control, etc., the author clearly presented the concept and perfected the framework of the owner's financial control under the model of entrusted agency. In this paper, through the analysis of financial essence and property right, the author presented the status of the owner's financial control as the mainstay, and analyzed three reasons for interior people control: first, the owner's being put emptily; second, defect of corporate governance; third, defect of management system of financial managers. On the basis, the paper put forward to set up finance and audit separately, and establish the bi-system of appointment including the management system of financial accounting personnel and the management system of interior audit personnel. The former regulates that the board of directors appoints financial controllers and financial controllers lead financial accounting personnel, while the later regulates that the board of supervisors appoints audit controllers and audit controllers lead interior audit personnel. The design can make sure that the board of directors, the representative of owners (shareholders) holds financial decision-making power in the financial control power. On the other hand, it can make sure that the board of supervisors, the other representative of owners holds the financial monitor power in the financial control power, as well as ensure the mutual monitor and make sure the owners'financial control power can come into fact. This paper has the positive reference value to the realization of owner's financial control power under the model of entrusted agency, especially for the protection of the owner's rights in the state-owned enterprises in China.