Enterprise Groups, Financial Management Theory And Practice

The enterprise group is a higher form of organization, which relies on the development of productivity and market economy. The enterprise group, an economic co-unit consisting of many enterprise legal entities, is organized through property rights connections and operational cooperation, and develops into the dominant forms of core companies and subsidiaries. As the deepening of our economic institutional reform, the enterprise group is taken as an important form by the behavior subjects of our modern market economy. The reason for the trend is that such an organizational structure can assemble large amount of social productivity , fully embody the basic characteristics of the commodity economy, and produce organizational effects, which can't be realized by individual entities.The enterprise group in China emerged in the 1980s. At the same time, its theoretical researches began. At that time, researches mainly focused on the significance of the establishment of the enterprise group, but failed to expound its systematic financial management. The lag in theoretical researches has confined the practical development to some degree. This dissertation, on the basis of the researches on the enterprise group in recent years and the author's own practical experience in enterprise groups in the last three years, discusses the financial management theory in the enterprise group in order to stimulate further researches.The dissertation constitutes five chapters. The whole paper is based on the organizational structure of the enterprise group, focuses on its nature, compares general characteristics of the enterprise financial management, iterates the goals of the financial management of the enterprise group, analyzes the strategies and explores the ways of administrating its financial management and the capital operations .Chapter 1: The introduction to the formation of the enterprise groupThis chapter explores its formation, theoretical explanation, organizational structure and management characteristics, in order to provide a theoretical frame for the following chapters. Chapter 2: The basic theory of the financial management in the enterprise groupThis chapter, based on the intake of the practical theories of western financial management and explores the characteristics and principles of the financial management in the enterprise group.Compared with financial activities of independently operated enterprises, those of the enterprise group possess the characteristics of penetration, variety, and flexibility. The complexity of the enterprise group financial management determines the following characteristics: 1) The financial management is a comprehensive managerial operation;2) The financial management connects widely with the managements in the enterprise group;3) The financial management could rapidly reflect the productive operation of the enterprise group.The objectives of the financial management in the enterprise groupThe objectives are the expected results of the financing activities as well as the criteria to evaluate whether the financing activities are reasonable. Scientifically set objectives for the financial management are of critical significance to optimize the financing behavior and realize the benign cycle. The objectives of the financial management should be related to the multiple interests groups within the enterprise group, and are the results of their interaction and compromise. The pursuit for the maximization of the group value possesses the following advantages:1) It takes the return achieving time into consideration and utilize the principle of time value to evaluate;2) It can scientifically assess the risk-return relation;3) It can overcome the short-run behavior of the member enterprises in the pursuit for profits.Chapter 3: The financial decisions of the enterprise groupThe financial decisions are the important part of the strategy management. Based on the researches on the internal and external conditions, it tries to make t...