From The Division Of Financial Power To The Division Of Financial Rights

The development of financial theory has always been based on the development and evolution of economics.

In the theory of economics, separation of two powers is an important content. Correspondingly, the distribution of financial rights in financial theory is also a hot topic of discussion.

Corporate governance structure: from hierarchical governance to joint governance, the traditional view is that the potential logic of capital employed labor is that shareholders invest in the establishment of enterprises, and the capital invested into specialized assets, such as equipment, plant and so on.

Because of the specificity and collaterality of these assets (human capital is not collateralized), the risk of enterprise operation is borne by the owners of these special assets, and the shareholders should have the right of residual income, that is to say, they own enterprises.

Other factors owners, such as human capital owners, can only be fixed income because of their liquidity, non collateralized and difficult to measure characteristics.

This logic abstracts the internal corporate governance structure into the principal-agent relationship between shareholders and managers.

The advantage of the above traditional theory is that it is consistent with the prevailing corporate governance in the period of emergence.

But with the rapid development of the economic form of enterprises, especially after the economic miracle of Germany and Japan after the Second World War and the trend of British and American mergers and acquisitions in 80s, people began to think about the new enterprise model to accommodate the phenomenon that the traditional models can not be explained. This is the common governance pattern of stakeholders.

Modern enterprise theory holds that an enterprise is not a production function or a production entity, but a group of contractual relationships or profit distribution mechanisms. It is embodied in the reality of social economy, that is, the existence of a large number of limited liability companies and Limited by Share Ltd.

For shareholders, equity is the right that companies give them, regardless of the scope of application or the degree of freedom is much less than the original capital ownership.

That is to say, shareholders' absolute control over the company does not exist, because the use of equity is restricted by other stakeholders.

This is the "common governance mechanism" under the modern enterprise theoretical model.

The joint governance mechanism of stakeholders is that enterprises are a set of contracts, including not only shareholders and operators, but also creditors, employees, governments, the public, suppliers, customers, etc.

Any party in the specialized investment that controls corporate governance will ask to participate in the distribution of enterprises: shareholders get dividends and dividends, creditors get interest, operators and employees get wages and rewards, customers and suppliers benefit from pactions with the company, and the government collects taxes from enterprises.

In this way, the company is responsible for the daily management and control of the company, and stakeholder stakeholders form a certain form of monitoring to the enterprise, and external forces also play a role of binding and regulating the company.

Two, the division of financial power: to promote the theory of financial power stratification, the theory of financial power stratification is divided into three levels: investors, managers and financial managers according to different characteristics of financial matters.

Obviously, the economic theoretical basis of the hierarchical system of investors, managers and financial managers is the principal-agent relationship between shareholders and managers. The hierarchical system of financial power is a one-way and hierarchical structure, and the direction of authority is a top-down relationship.

With the emergence of the mechanism of stakeholder co governance, the theory of financial power stratification will show various discomforts: firstly, the financial sector generally believes that the theoretical foundation of the theory of financial power stratification is the two nature of the financial entity, that is, the existence of the division of financial rights by owners and managers, leading to the stratification of financial rights.

However, the author believes that the financial rights of modern enterprises are independent. Modern enterprises (companies) have the same nature as financial entities, while the main body of financial governance or financial management subjects may be pluralistic, such as shareholders' meeting, board of directors and managers.

Therefore, the existing theory of financial power stratification is essentially the distribution of financial rights among internal financial governance subjects of the same financial entity, so we must never negate the financial entity's unitary nature.

Second, the fundamental purpose of the arrangement of corporate governance structure is to enable all assets and powers to achieve effective restraint and supervision in the state of mutual separation, so as to achieve the balance of interests and powers in all aspects.

The existing hierarchical system of financial power embodies a top-down relationship and a one-way structure.

Obviously, the lower body can not supervise the upper body, let alone check and balance each other.

Third, in modern corporate governance, the governance mechanism of the creditors is a very important link. That is to say, the main body of financial governance may be the main body outside the financial entity. Their financial power does not belong to the category of stratification, and it is a parallel subject, which is undoubtedly a major deficiency of the existing financial stratification theory.

Under the common governance mechanism, each stakeholder joins the enterprise in an equal manner, and the financial relations of the stakeholders tend to be more equal, and the financial power will be distributed in a parallel way, not a unidirectional, bureaucratic structure.

The advantage of parallel partitioning is to maximize the interests of all interested parties and to take care of the interests of the main stakeholders.

Because different parties have different influence on the level of return on assets, correspondingly, the proportion of financial rights they control is different, that is, different stakeholders have different share in the division of financial rights.

Therefore, in a sense, the mode of parallel division of financial power is not negation of financial power stratification, but rather based on the theory of financial power stratification, enlarging the extension of governance body and strengthening the concept of CO governance.

Three, the division of financial power in financial relations, as mentioned above, the parallel mode is the financial system that can best accommodate all the interests of all parties concerned. Then, how can the financial relationship and financial rights be divided among the parties?

When enterprises raise funds, the flow of property rights flows from different owners or users to other owners or users. Different financial entities form different financial relationships: ownership relationship or creditor relationship, or a creditor's right relationship that can be converted to ownership relationship under certain conditions (issuing convertible bonds).

The relationship between investors or shareholders and enterprises and their operators is fundamentally the relationship between capital contribution, capital granting and capital utilization.

Here, shareholders have ultimate ownership.

With the development of enterprise's production work, the real stakeholders of enterprises have gradually formed.

They include: operators, employees, governments, suppliers, customers and creditors.

Under the modern market economy condition, operators occupy a special position in Enterprises: they are the main controllers of the power of enterprise operation and financial decision making, and the key to the realization of financial interests of other stakeholders. There is incentive problem due to moral hazard and adverse selection.

The financial relationship between an operator and an enterprise legal person may be a pure employment relationship, or a mixture of employment relationship and ownership relationship. It may also evolve into ownership relations under certain conditions in the future. No matter what their status is, they must control a lot of financial rights of enterprises.

The most important thing is that the operator has acquired the legal person's property right of the enterprise.

Therefore, for operators, the effective allocation of financial rights is the core issue of forming healthy financial relationship with corporate juridical person. It is necessary to establish an effective financial incentive constraint mechanism.

Employees are the main force in the production and operation of enterprises.

In practical work, a major issue in enterprise management and financial management is how to maintain the personal goals of employees in line with the overall goals of the enterprise.

The emergence and development of the new enterprise system form such as share system and stock cooperation system enable employees to cooperate with their enterprises in labor (human capital) while realizing the cooperation of financial capital.

In this way, the financial relationship between employees and enterprises has been further deepened and consolidated.

Some scholars believe that ownership of human capital is a trend.

Although this view still needs time to test, in practice, it is an indisputable fact that human capital owners get the shares of enterprises by virtue of their unique human capital, which is reflected in the financial relationship, that is, the owners of human capital will have a share in the residual financial income rights and residual financial control rights.

The government collects taxes from enterprises in accordance with the law and charges all kinds of services for enterprises. This is already stipulated in law.

The government, as a macroeconomic manager, formulating policies, or carrying out management or restrictions on the conduct of enterprises because of safeguarding public interests or considering their own interests, will also have an impact on the operation and financial work of enterprises.

The practice evidence shows that China's tax burden is not heavy from the macro perspective, but the overall tax burden of enterprises is heavier, mainly due to the government's various charges for enterprises, which is a direct manifestation of the distortion of the financial relationship between the government and enterprises.

Suppliers and customers are located at both ends of the company's production.

Business dealings with suppliers will generate accounts payable, and business pactions with customers will generate accounts receivable, which is a concrete manifestation of financial relations.

In modern society, the relationship between enterprises is increasingly close. In order to create a stable and developing supplier and customer network, enterprises often form some form of strategic alliance with them, and this strategic alliance must eventually be implemented to the financial relationship between the two sides.

On the one hand, in order to achieve friendly cooperation with suppliers, we should follow the principle of equality and mutual benefit to handle financial relations.

On the other hand, in order to reduce dependence on suppliers and reduce paction costs, manufacturing enterprises can implement vertical integration strategy and enhance efficiency.

Relevant research shows that the level of debt is positively related to the degree of competition in the product market.

That is to say, when enterprises compete fiercely for customers in the product market, they often have close financial relationship with creditors.

When enterprises allocate money providers, the distribution relationship is an important part of the financial relationship of enterprises.

In the traditional mode, creditors only get fixed income when they participate in the allocation of enterprises, but under the joint governance mechanism, this pattern may change in the future: floating interest rate, possible and residual distribution, and creditors' participation in the direct management of enterprises.

In reality, it is of great significance to attach importance to the status of creditors in the allocation of financial rights of enterprises. First, if creditors grasp some important financial rights, they can effectively supervise the behavior of shareholders, especially large shareholders, so as to protect their interests while protecting the interests of small shareholders.

Secondly, due to the existence of principal-agent relationship and asymmetric information, the major decision-making power of enterprises is actually held in the hands of operators, forming an insider control situation.

As a contributor to a company, creditors can effectively supervise the behavior of the operators and curb insider control if they properly use the financial power they have in hand, so as to protect the interests of the vast majority of shareholders.

Third, it helps to form an interactive relationship between banks and enterprises.

The creditors of Chinese enterprises are mainly state-owned commercial banks.

If banks fail to exercise effective financial supervision right after they invest funds into enterprises, it is easy for enterprises to take into account the interests of banks without considering or considering the interests of banks in the use of debt funds, resulting in the problem of bad creditor's rights in banks, and to crack down on the enthusiasm of banks to inject funds into enterprises.

Conversely, in the allocation of corporate financial governance rights, if banks and other creditors have a place, they can effectively play their financial supervision function.

In this way, we can not only stimulate their investment enthusiasm, but also make effective use of corporate debt funds and eventually form a benign and interactive relationship between banks and enterprises.