A Research On Financial Control Of Enterprise Groups

The mode of enterprise group is the important organization of modern enterprise. The development of the economy depends on the development of the enterprise groups to a great extent. Enterprise groups started rather later in China but developed very fast. Because of the influence of traditional economic structure and idea, some problems emerged. It is the prominent problem that the financial control of Chinese enterprise groups can't exercise effectively. Only when the parent company can successively exercise the financial control over the subsidiary companies, the group can realize the superiority of resources conformity, otherwise the development of the group will be hindered. Under this situation, researches on the financial control of Chinese enterprise groups have great immediate significance.This paper starts from the present situation of financial control in Chinese enterprise groups, through a thorough study, and analyzing the successful experiences of some enterprise groups home and overseas. Finally, the paper puts forward some suggestions to improve the financial control of Chinese enterprise groups.To sum up, financial control of Chinese enterprise groups doesn't exercise effectively. In some groups, financial control is excessive and in others it is insufficient. There are several reasons, including not straightening out the financial relationships in groups, the imperfection of corporate governance, motivation and restraint mechanism, and so on. The root cause is that there's inconsistence in interests between subsidiary companies and parent company. The interests of subsidiaries are independent, that causes the coordination between individual interests and the whole. Financial control of groups works for leading the actions of subsidiaries to the whole strategy of the group.The particularity of financial control of group stems from the particularity of enterprise group. For the objective to realize the largest interests of the whole, financialcontrol must meet requires of the enterprise group. The innate character of enterprise group comprises two aspects. One is internal purpose and the other is external feature. These decide the particularity of financial control of enterprise group. The particularity reflects in subject, object, objective, method, and environment of financial control.Financial control mechanism and model must meet the particularity of financial control of group. Above all, the objective of financial control of group needs to be clarified. Because clear objective enable the subsidiaries to define how their choices made. Financial control mechanism also include control over organization, personnel and cash flow, perfect system, budgeting mechanism, combining encouragement with supervision, and so on. The choice of financial control model depends on the specific conditions of the enterprise group. Usually, according to the arrangement of financial controls between parent company and subsidiary companies, financial control models are divided into three types. There are many factors affect the arrangement of financial controls, including market environment of the group, group organization, development stage of the group, and so on.Finally, according to the analysis and study before, and considering the specific conditions of our country, the paper puts forward that financial control of Chinese enterprise groups should carry out the control model that takes centralization of state power as dominant factor, while decentralization of power as subsidiary, rely mainly on perfecting the financial control mechanism to control subsidiary companies. Improvements should focus on six aspects, such as perfecting corporate governance, making the objective of financial control of the group clear, strengthening budget control, centralized control over funds, combination between encouragement and supervision, perfecting system of internal report.