The Research On New Theory Of Financial-right Allocation

Financial-right allocation is the core of financial governance structure. Deepening the research on financial-right allocation is of grate theoretical and momentous current significance to financial governance and corporate governance. Above all, this paper reviews and evaluates the connotations of property rights, financial-rights and the theory of financial-right allocation, then investigates the basis of the theory on the paper. The new theory on financial-right allocation is based on corporate property rights theory, contracts theory (include incomplete one), corporate governance theory (contain general one and surplus one) and the property-rights-flow theory. After the discussion of the connotation and the value direction of property rights, we find out that financial-rights can be divided into general financial-rights based on corporate fair and residual financial-rights based on corporate efficiency by the completeness degree of contracts. In a word, financial-rights can be expressed as the combination of general financial-rights and residual financial-rights. Then, we verify our findings. The paper discusses the best rules of financial-right allocation and suggests that financial-right allocation should embody both fair and efficiency, with two value systems in essence, including general financial-right allocation with fair and residual financial-right allocation with efficiency. In practice, a certain financial-right allocation is in the balance of fair and efficiency. Given a certain financial-right, if the general one in it becomes superior, it should demonstrate more fair in arrangement, otherwise, more efficiency. Thus, we can get some conclusions as follows: (1) general financial-right allocation should emphasize fair and protect the interests of stakeholders in order to form a stable anticipation for financial-rights owners in contracts; (2) residual financial-right allocation should emphasize efficiency and maximize the corporate-rent in order to supply a encouragement mechanism for financial-rights owners in contracts; (3) financial-rights are the combination of general financial-rights and residual financial-rights. Given a certain financial-right, if the general one becomes superior, financial-right allocation should embody more fair, otherwise, more efficiency; (4) which is more important in a certain financial-right, general part or residual part? It is according to the completeness of the financial-rights contracts. Usually company act, securities laws and articles of association are the most important reference materials. As we know, there are four specific financial-rights in corporation, financial decision-making right, financial execution right, financial supervision right and financial income-distribution right. Through a deep analysis of the four specific financial-rights, we can get the best regulations of financial-right allocation. Last but not least, based on the review and analysis of corporate merging theories and boundary theories, we reconsider the problems existed and introduce the theory of financial-right allocation into corporate merging theory, then expound and prove the boundary theory based on financial-right allocation. The new theory is the newest expression of the old corporate merging theory. In our opinion, it will play an important role in corporate merging decision-making practice and promote the probability of success in merging and acquisition.