The Research Of Contingent Financial Governance

Research of financial governance has been a hot spot of corporate governance, how to strengthen the rights protection of different stakeholder, and the process of how to form a balance mechanism is a big issue placed in front of the financial governance. The core issues of financial governance are the configuration of property right, namely how to distribute configuration of property right between shareholders, managers and creditors. The configuration of property right is the basis of achieving financial objectives, as the core link of financial governance, its distribution has state dependence, namely, according to the principles of risk and contribution of financial resources it is allocated in the financial bodies, the configuration of property right is dynamic and contingent. The purpose of contingent financial governance is to study the distribution of financial rights in different state. According to the inputs of company include two types of resources-human capital and financial capital which are divided into equity capital and debt capital, easily to know the financial bodies are the managers, shareholders and creditors corresponding to resources, in different operating states, there is a difference between the contribution and risk of financial resources, it needed to protect the interests of the financial bodies in accordance with operating conditions.We believe that the essence of contingent financial governance is financial power dynamic configuration according to contribution and risk status of the financial bodies. Contingent financial governance is a mechanism that the financial bodies who is the largest contributor or is most at risk acquires the financial control to protect their own interests. A competitive managers market, capital markets and product markets are the external environment for financial rights transfer in contingent financial governance. The different financial bodies require different financial control and financial returns, by financial power analysis of managers, shareholders and creditors, we believe that there are three types of managers’financial control, including the financial decision-making power authorized by the Board of Directors, right of responsible for implementing the Board’s financial strategic decision, right of financial implementing, managers’ payback right include access to the right to compensation and stock options. The financial control of shareholders is investment decision-making power, profit-sharing rights, the right to change the capital, financing, the right to monitor. The right of shareholders’financial benefits is to obtain dividends. Creditor’s rights can be divided into three kinds of financial control, right to be informed in advance, right of cost of debt pricing, right of formulation of debt terms,financial supervision and principal and interest claims and legal rights, the right to financial benefits is getting fixed or changes interest income accordance with its debt covenants and corporate conventions. In the case of abnormal operating condition, financial body needs a mechanism to ensure that their rights, we believe that the manager-layer replacement, control transfer,proxy fight and creditor contingent control are primary mechanism of corporate financial governance.Finally, we conduct empirical research the contingent financial governance of listed companies in China, in order to test the contingent financial governance.The principal innovations of this article are:Innovative research perspective:the previous literatures on financial governance focus on the study of financial governance structure, and the links of efficiency of governance structures and governance structure, without considering the dynamic property right allocation. In this paper, we study the financial bodies’ interest demands under different operating conditions with dynamic point of configuration property right.The study of innovation:debt is an important resource for business, bear the risks of an enterprise, however, creditors only get fixed benefits, compare to stockholders, the permanent nature of the shares entitles shareholders having a greater involvement in the power of financial governance than the creditors, there are financial resources, debt resource has advantages of solving the shortage of funds and a tax-saving, but in reality the creditors did not participate in financial governance mechanisms, in this situation, we think creditors become the financial body and protect their own interests in a positive way in this paper.Innovative research method:at present, there are many research results of financial governance from the perspective of financial governance structure, and the results of these studies are mostly normative research, have less empirical research. However, theoretical research on the contingent financial governance is short, and there is no empirical research. In this paper,100 listed companies in China’s Shanghai stock market and Shenzhen stock market as the research object, Logistic regression model used as data processing techniques, through the layer of manager turnover, difference of ownership and control, cost of debt ratio to study the 100 listed companies’contingent financial governance.Of course, in this paper, research perspective, research contents and methods are the inheritance of development research results, inspired by research results in previous. The author hopes that this research point of view, research contents and methods can give some enlightenment to later researchers in order to play the effect of attracting valuable opinions.