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Concept and configuration analysis of the company's financial governance right

Author: WangZongHui From: www.yourpaper.net Posted: 2009-11-04 10:37:35 Read:
Abstract: financial governance as a company financial power configuration system, under the correct guidance of the concept of reasonable configuration of the three aspects of financial decision-making power, the right to financial performance, financial supervisory authority in the company's internal and external. Financial governance should adhere to the financial power of checks and balances, incentive and restraint and interests compatible with the concept, we are preparing the company's financial power configuration.
Keywords: financial governance; the EVA philosophy; stakeholders

Financial governance is the key and core of corporate governance

Corporate governance structure is essentially a set of systems inside and outside the control of the enterprise and established enterprises arrangements. With the separation of ownership and management, part of the company's agency relationship serious imbalance. Owner on behalf of the absence of internal control, audit relationship is not normal and independent directors are not independent the imperfect real performance of corporate governance. They are a common feature mainly affect the quality of listed companies by the level of financial governance.
Different from the value of capital movements and corporate financial management as a managed object, financial governance refers to the shareholders and other stakeholders to achieve long-term goals of the company, the rational allocation of Corporate Property, to balance the parties financial rights, responsibilities and interests a set of formal relations, the formation of an effective financial incentive and restraint mechanisms, informal institutional arrangements and mechanisms. Which a main financial resources have control over property rights, including the power of the usufruct right to investment, financing, financial decision-making power. The purpose of the company's financial governance is the agency relationship in order to solve a variety of economic conflict of interest. Just as financial management is the core of enterprise management, financial governance is the key to improve the corporate governance structure and core. If financial governance is about how property rights in the internal configuration of the contract, then the financial management of the implementation of this contract.

Second, the concept of financial governance

(A) the financial power of checks and balances concept
Companies maximize the value of this goal is not only to consider the legitimate rights and interests of the of corporate contractual relationship subject, and take full account of the balance of risk and reward for the philosophy of the company's financial governance to coordinate the relationship between the largest shareholder and minority shareholders and other stakeholders of the . However, the actual situation, the various stakeholders, especially financial information is asymmetric. According to the financial information and dependence, stakeholders are divided into two categories: the first category rely on internal financial governance, property rights arrangements to protect its interests in the corporate organization; related to the second class interests other than relying on external financial governance Company with the company's contractual arrangements to protect its interests. The former mainly includes controlling the company's major shareholders, board of directors, managers, and they have a decisive role in the authenticity and validity of the financial information. The latter mainly refers to the small and medium-sized companies outside shareholders, creditors and government departments. Their financial information in a passive low easily, and thus their interests have been infringed. External stakeholders in the event of a violation will produce a number of adverse consequences, such as bank loans difficulties brought about by the lack of credit, stock market chaos difficult to protect the interests of shareholders and trigger a stock market financing difficulties. Therefore, should be two types of stakeholders in the area of ??financial governance are equally important, the focus of the company's financial governance mainly in coordination with the checks and balances of the financial power of the two types of stakeholders.
Failure of internal financial governance body behavior, external financial governance body is bound to take a certain amount of checks and balances. For example, in the current financial crisis hit, by the administration in order to ensure the stable development of China's stock market, to avoid dividend policy at liberty to make misappropriating market atmosphere, October 9, 2008 issued a "cash dividend on amending the listed companies certain provisions of the decision. " Which allocated to the cash accumulated profit of not less than the last three years the average annual allocation of 30% of the profits. These provisions reflect the proactive checks and balances of the China Securities Regulatory Commission, external financial governance body adjust.
(B) the concept of incentive and restraint
Establish and improve the financial incentive and restraint mechanisms hierarchical decision-making mechanism and financial governance team can make the layers of agents to the appropriate use of financial power to fulfill its duties. For example, EVA economic value added as a new business philosophy, which allows us to re-examine the system design, property rights arrangements, have every reason to be included in the scope of financial governance. Under the guidance of the concept, the company incentive system has been redesigned, and the economic interests of the company and management personnel to get a good compatible. This philosophy financial governance effect mainly on the rational allocation and effective utilization of the operating management of the property rights of
(C) interests compatible with the concept of
Company financial governance of the two types of stakeholders within the company's owners, operators, employees outside the company's creditors, minority shareholders, customers and government the same focus. Enterprises to maximize the value of such governance objectives under the guidance of the company is more likely to take into account the sustainable development of enterprises, taking into account the interests of the community, both inside and outside interests subject to further regulate the generation of financial information, transfer, and disclosure mechanisms, we are preparing the company financial authority reasonable configuration. Third, the configuration of the company's financial governance rights

The company's financial governance rights, including the financial decision-making power, financial performance and financial supervisory authority. Among them, financial decision-making power is the core of the financial management right. Therefore, the configuration of the core configuration of the financial decision-making power is also the Financial Governance. In general, financial decision-making power is mainly focused on the shareholders' meeting, the Board of Directors; financial supervisory authority focused on the Board of Supervisors as well as external creditors, independent auditing unit; responsible for the financial performance of the managers.
(A) to improve the company's internal financial management right division system
Right division of the company's internal financial governance system, that the shareholders' meeting, board of directors, board of supervisors, business management and other related departments, the property rights of personnel division, defined in the system. Require specialized knowledge in financial decision-making power in the modern agency relationship should be clearly defined at all levels in the financial decision-making authority and responsibility of financing decisions, investment decisions, revenue allocation decisions, in order to achieve the institutionalization of internal financial decision-making management and programmed. The proxy chain length, size of the company, the development of the IT industry has different characteristics of agency costs, and thus are an important basis for decision-making powers by. In general, the financial decisions of the shareholders' rights should be the strategic level, and financial decision-making powers of the Board of Directors should be a combination of strategy and tactics, the combination of its financial governance and financial management. Through the establishment of the Professional Committee, and other ways to improve the system of board of directors, is conducive to give full play to its decision-making functions, and strengthen communication and coordination of investors and managers.
Governance from the financial point of view, the internal financial supervision system mainly refers to the board of supervisors of financial supervision, the supervision of the owner to achieve by the Board of Supervisors. Optimize the capital structure for the establishment and improvement of corporate oversight mechanisms, has important theoretical and practical significance, because of the different capital structure affects the efficiency and effectiveness of financial governance. The options too concentrated or dispersed capital structure, are not conducive to the establishment of the mechanism of internal financial controls in the financial governance. For the plight of the property in the form of state-owned enterprises "agent Absence", a more effective approach is to go up to solve the financial power configuration, namely to increase the financial supervision of the Board of Supervisors and consider the introduction of international accounting firms, the financial power of the state is mainly reflected in the supervision on.
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