The Discussion Of Financial Failure From The Angle Of Institution

Finance is backbone of business working, and well financial management is base the of enterprise's development But modern enterprises will often meet the risk of financial failure in complex and changeful market environment If dealt with improperly, financial failure will not only effect enterprise's daily work, but also result in bankruptcy when gravely. After China's entry into the World Trade Organization (WTO) , the enterprises in China must adapt the opportunities and changelings which are caused by the entry. To prevent and forefend the risk of financial failure is the most important issue that the administrators must think of.Firstly, the paper defines the connotation of financial failure, and compare it with two relevant concepts: financial risk and bankruptcy. Then I review the classical articles in this field, and find that they mainly analyze its reasons from respects of market, competition and management It's considered mat bad management is chief in all reasons. The thesis makes research on finance failure from the angle of institution. Obviously, there are some significant technical characteristics in bad management, but at the same time a lot of institutional factors have strong influences over it I put forward that the faultiness of corporate governance is just the further reason results in financial failure. To make a brief analysis of the relationship between corporate governance and financial failure, I choose "Enron", "houwang", "yinguangxia", "zhonghangyou" as four typical cases.Based on this discussion, we draw a conclusion that corporate governance has to be perfected to prevent and forefend the risk of financial failure. Its main problems are the following, shareholders' meeting has been the meeting of major shareholders, minor shareholders' interests and rights have been damaged, the boards of directors are short of independency, chair of board overuses his power in decision making, the insiders' control of executives is serious, and so on. The mechanism of corporate governance is becoming a hot topic of modern corporate institution research, which is made up of many mechanisms. Since finance functions as the focus of stakeholders' interest in a company, corporate financial governance becomes the core of the corporate governance which is contemporary corporate' representative feature. Proper financial governance is one of the most important decisive factors of corporate performance. So we provide improvement measures and suggestion from the angle of finance. In other words we must reinforce corporate financial governance.