Study On The Mechanism And Control Of Financial Risk In CTEs

Research on financial risk prevention and control in Chinese township enterprises (CTEs) of larger scale, from the angle of risk management, has an evidently practical and academic significance to propelling the foundation and consummation of Modem Enterprise System, ensuring the survival and development of CTEs, and then promoting the sustainable development of rural and national economy at present. On the basis of summarizing the literature of financial risk theory and methods in China as well as in other countries, according to the practical situation of CTEs, with the reference on system and control theory, and with the method of systematic analysis and decision analysis, an analyzing framework to study financial risk mechanism and control in CTEs was put forward in this paper. The framework includes the following aspects: financial risk formation/conduct mechanism analysis, risk prevention/control mechanism analysis, risk level estimation and cause diagnosis, and risk prevention/control tactic system analysis. Based on the recognition of financial risk originating from the objectively existing uncertainty of operating environment and managing decisions, in the light of the factors of economic policy, market, technology, and financing decisions which are more relative with the sustainable development of CTEs, with the method of model analysis and cause-result analysis, the mechanism and effect of critical factors resulting in financial risk was analyzed in the paper. Then the synthetical effect mechanism of financial risk formation/conduct in CTEs was discussed with the method of system analyzing and synthesizing. With the core issue of financial risk prevention/control mechanism, the motives and behaviors of risk prevention/control of the subjects of the CTEs were analyzed intensively in this paper, and the drive mechanism was summarized and compared with the state-owned and listed company. Then the operation mechanism of risk prevention/control was discussed from the aspects of analyzing model, basic procedure and pattern. The conclusion is that the risk prevention/control mechanism is defective in most CTEs. By reason that financial risk level estimation and cause diagnosis are the precondition of risk prevention and control, by means of business performance assessment method, according to the judgement rules, the financial risk level and causes of the listed CTEs were analyzed systematically. The result is that absolutely most listed CTEs are in risk situation and the causes are the lower return of main business, higher receivables, lower capability of short-term debt redemption, and unsustainable increase of net profit. The research on the tactic of risk prevention and control is the aim of financial risk analysis. Based on the analysis of object system and basic method of risk prevention and control, from the angle of risk level changing, risk mechanism improving, and business characteristic optimizing, the basic approach to forming the tactic system of risk prevention/control was put forward. And the formation of tactic was analyzed emphatically from the point of business characteristic assessment and optimization with the case study.