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Our company finance and risk management research

Author: SunXianFeng From: www.yourpaper.net Posted: 2010-03-27 16:13:40 Read:
Abstract: companies in the financial management process often face a variety of constraints, different structural model of corporate governance, financial management strategies, as well as the concept of fiscal management, and so will the company financial revenue-generating uncertainty. Faced with these financial risks, the company must strengthen the training of operational staff, to straighten out the relationship of the corporate governance structure and financial goals, to prevent moral hazard that may arise in financial institutions, to establish an effective risk management system and risk reporting system to ensure that the final financial goals implementations.
Keywords: Corporate Finance; risk management; moral hazard
Thanks to various fiscal constraints, different corporate governing patterns, diversified financial strategies and conceptions, companies will always be subjected to the revenue uncertainties. Faced with these financial risks, companies need enhance business personnel training, streamlining the structure of corporate governance and financial management objectives , establish the effective financial institutions to prevent their moral hazards. The establishment of an effective risk management system and risk reporting system can ensure of the ultimate financial objectives.

Often face a variety of risks in the financial management process, for example, due to unexpected factors led to the stock market fell sharply leaving the stock stuck risks; economic development has entered a new round of macro-control cycle, due to the increase in bank base rate, will lead to bond the actual yield decreased risk; foreign exchange rate because of unforeseen international factors have led to significant changes, especially the sharp rise of the RMB exchange rate will inevitably impact of foreign exchange financing products, income uncertainty wind
Risk gradually increase. How to anticipate and guard against these risks become important task of the management of the corporate finance business.

Exposed just company specific risks in the financial performance, should be on guard against financial risks, we must tap its business to carry out the process of deep-seated causes of the risk. The surface is a simple use of funds and assets, in fact, its risk is often from outside the capital level of the corporate finance business.
(A) the corporate governance structure of the constraints of the company's financial goals
Modern companies need to form a mechanism of checks and balances between the owners and operators, corporate governance structure is such a mechanism for a coordinated relationship of the shareholders and other stakeholders. For a long time, most of the company's governance structure framework is the the shareholders first principle in this Corporate Governance logic, the goal of financial management is to maximize wealth for shareholders by a reasonable operating on the financial. But in the modern enterprise, in addition to shareholders' invested capital, general managers, employees, creditors and other stakeholders for the development of the company's assume greater risk, if the emphasis on maximizing shareholder wealth simply ignored the other groups interests will lead they automatically split between the company and the interests of the bond, and not be able to cultivate long-term loyalty to the company's employees, with increasing emphasis on the concept of human capital is contrary to modern management theory, and thus to the shareholders based on the principle of the supremacy of the establishment development and adjustment of the corporate governance structure. Company financial goals as an important subsystem in the framework of the corporate governance structure and running, it is not only a direct reflection of the results of the changes in the corporate governance structure of the environment, but also need to be appropriately adjusted according to changes in the governance structure of. Therefore, the company financial goals should adapt to the development of the corporate governance structure and change, and thus the growth of the enterprise value through financial management activities to meet the interests of the stakeholders, otherwise it will be great invisible potential risks brought about the development of the company.
(B) Corporate Finance Strategy missing the risks
For modern corporate management is no longer simply the use of production and sales tools to create more wealth for shareholders and other stakeholders the the reasonable operating funds largely determine the future development of the company. Therefore, to develop a suitable financial management strategy and market environment is particularly important. Corporate finance strategy, including the company's financial assets and funds can use different levels to achieve the milestones, the outsourcing of financial institutions, financial planning tools, as well as maximum tolerance and prevention of risks that may arise, to resolve. Financial management strategy is a full range of programmatic document contains financial management process in the various details of the factors, the company must perform steadily in accordance with established procedures. A very important aspect in the implementation of financial management strategic planning, timely feedback and adjust financial goals. , Thus affecting the market, especially in the rapidly changing financial markets, the effect of the use of the company's financial management tools may produce great negative impact to achieve financial goals. In short, the financial management strategic planning is an important guarantee to achieve corporate financial goals, develop financial strategic planning, but by virtue of any of the operations of the market feel, will give the company's assets and capital operation incalculable loss.
(C) the result of irrational investment concepts financial misunderstanding
The ultimate goal of the company's financial management to the company is able to achieve higher revenue to meet the needs of the parties stakeholders. Under the domination of this concept, many companies tend to always financial operations profit maximization as the goal of beginning to end to implement. Especially when the development of the market economy is not mature as well as the relevant regulations are not perfect, and the market surveillance mechanism has not been fully improved market checks and balances are still very weak, there are more and more companies to pursue violations benefits. The wrong financial concepts sometimes give the company a short-term interests, but the depth of the potential risk will eventually lead to company suffered heavy crisis of confidence, to fall into their mining financial trap. There are a number of financial institutions providing wealth management business blind commitment to wealth management products to provide security at the end, the financial plan or a disguised form of high interest Lanchu, is not conducive to the protection of the legitimate rights and interests of investors. In addition, the company is also likely to fall into the following fiscal Misunderstandings: focus on short-term gains and ignore the long-term financial strategic planning; lack of understanding of the relationship between risk and return, the the blindly institutions to promote the so-called "low-risk, high-yield" financial products, completely funds its own internal laws governing the operation overlooked; diversify risk awareness is not strong, a lot of companies in the finance and investment products, overestimated their risk tolerance capacity, heavily concentrated into its promising high-risk project.
(D) The new corporate finance tool the risks
From wealth management services company in the internal angle of view, through the use of innovative financial instruments to improve its liquidity and security of the operating assets and reduce financial operating costs and transaction costs to maximize value, which is the company's financial activities sector in the internal motivation to promote the development of the new wealth management business. Financial institutions through the development of risk management techniques can improve the profitability of financial assets and the ability to use cash investment and innovation to create greater value for investors. Innovative financial tools, however, are based on the traditional financial tools as the basis of derivatives, such as options, futures trading, their risk was significantly greater than traditional financial management tools. With the growing size of financial markets and the complexity, the uncertainty of capital activities become more prominent. At the same time, the multi-faceted business efforts to make a reasonable portfolio faced a possible outbreak of risk is also increasing. Companies must use new financial tools to conduct business on their trading activities to the development of a sound internal control measures, including trading position limits, stop-loss limit, internal oversight and auditing. If the internal control system for missing and imperfect, operational risk and market risk caused by these new financial instruments will be enormous, the company can not afford this possibility than enlarged several times the risk of loss of principal. Second

Its wealth management business is often overlooked for the prevention and management of risk, the main reason for the selected financial products blind and fanatic agent financial financial institutions, either case, will lead the company suffered large losses, which departed from the company increasing the value of funds to develop early goal. Manage financial risk itself is a manifestation of the financial management capability.
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