The Impact Of Parent-subsidiary Company Financial Control On Group Performance

The socialization production and fierce market competition drive enterprises to realize their leap from individual management to group operation. In expanding their scale and diversifying industries, the group mismanagement problems rise gradually. As key measures of group management, parent-subsidiary financial control contributes to exert integrative advantages and maximize group value. The study will theoretically reveal the internal mechanism of parent-subsidiary financial control and practically figure out the future directions of parent-subsidiary financial control.This paper began with its research based on a review of current study at home and abroad and a combination with the group characteristics and practices of parent-subsidiary financial control. Then related conceptions and fundamental theories were demonstrated.After describing the present situation of parent-subsidiary financial control, this paper analyzed the existing problems. Once again, based on the subsidiary management system reports from companies of Shanghai and Shenzhen stock exchange from 2011 to 2014 and a comprehensive evaluation of group performance with factor analysis, the multivariate regression model of parent-subsidiary financial control and group performance was built.The conclusions are as follows: parent-subsidiary target control, capital control and financial information control have significant positive impacts on group performance,whereas financial personnel control has significant negative impacts on group performance. Hereinbefore, parent-subsidiary target control consists of comprehensive budget management and performance appraisal control; financial personnel control consists of subsidiary CFO designation, designee training and shifting; and financial information control consists of the same financial software between parent and subsidiary,executives regularly report mechanism and information responsibility mechanism in subsidiary company. Finally, some suggestions are put forward for strengthening the parent-subsidiary financial control to improve the group performance.