УДК 005

Corporate management core: an integrated exploration of asset structure and financial management

Сунь Юймэн – магистр Белорусского государственного университета.

Abstract: In the 1990s, the overcapacity under the expansion of economic scale and the complexity of organizational structure after the wave of mergers and acquisitions and restructuring made listed companies face a series of problems such as internal control pressure, low performance, financial difficulties and restructuring pressure. The traditional "capital market financial theory" can no longer meet the needs of economic growth and solve the practical problems of Corporate Finance, and the search for new economic growth points requires in-depth consideration of the substantive changes in organizational structure and redesign of organizational control mechanisms. This is why it is important to shift the focus of research from capital markets to internal organizational management around stakeholder relations, which highlights the significance of understanding Corporate Finance from a management perspective. This internal organizational management involves a range of financial activities such as strategic planning, corporate decision making, performance ratings and incentives.

Аннотация: В 1990-х годах избыточные мощности в условиях расширения масштабов экономики и усложнение организационной структуры после волны слияний и поглощений и реструктуризации привели к тому, что зарегистрированные на бирже компании столкнулись с рядом проблем, таких как давление внутреннего контроля, низкая эффективность, финансовые трудности и давление реструктуризации. Традиционная "финансовая теория рынка капитала" уже не может удовлетворить потребности экономического роста и решить практические проблемы корпоративных финансов, а поиск новых точек экономического роста требует глубокого рассмотрения существенных изменений в организационной структуре и перепроектирования механизмов организационного контроля. Именно поэтому важно сместить фокус исследований с рынков капитала на внутреннее организационное управление вокруг отношений с заинтересованными сторонами, что подчеркивает важность понимания корпоративных финансов с точки зрения менеджмента. Это внутреннее организационное управление включает в себя ряд финансовых мероприятий, таких как стратегическое планирование, принятие корпоративных решений, оценка результатов деятельности и стимулирование.

Keywords: management, finance, management, financial management, research.

Ключевые слова: менеджмент, финансы, менеджмент, управление финансами, исследование.

In order to understand Corporate Finance from a management perspective, it is necessary to clarify the nature of corporate organization and management activities, and many scholars, such as Coase (1937), Alchian and Demsetz (1972), Jensen and Meckling (1976), proposed the "contract theory of the firm "This theory defines the essence of the firm as a series of contracts, including debt contracts, equity contracts, managerial contracts, employment contracts, supply chain-related contracts, and other explicit or implicit incomplete contracts between stakeholders [1]. This theory cleverly uses the contracts among stakeholders in the organization to decompose the enterprise in detail, shifting the relationship between the enterprise and the external market to the relationship between people inside the enterprise, providing a favorable analytical tool to clarify the "enterprise black box", realize the sub-module management, and set up the corresponding control governance mechanism. In addition, Coase (1937) argues that the reason why firms replace the market in the allocation of resources is that the transaction costs of intra-firm transactions are lower than those of transactions organized by the market. In Coase's view, the transaction cost of such internal organizational transactions is the organizational management cost of "authoritative" allocation of resources in a hierarchical system, in other words, the allocation of resources within the firm is done by the entire management system. Management efficiency directly affects the level of organizational transaction costs and its survival or death. In "Ownership, Control and Incentives", Yu Chen [2] points out that management is a special kind of labor that coordinates input activities and implements the contracts reached between input elements. Thus, based on the management dimension, Corporate Finance, as an important part of enterprise management, is essentially oriented to the actual financial problems, with the goal of achieving the interests of all stakeholders (contract holders), as well as the regulation of the organization's financial resource allocation and value appreciation (optimizing investment and financing decisions and improving corporate performance), through the design of incentive and supervision mechanisms (making the best possible contract) and management control systems. The objective is to manage the equilibrium conditions of the contract between the stakeholders (contract holders) by designing incentive and monitoring mechanisms (making the best possible contract) and management control systems (dealing with uncertainty and information asymmetry outside the contract). In short, Corporate Finance is a series of contract management actions aimed at improving the efficiency and value of financial resource allocation [3].Stakeholders are the key subjects that make up the set of corporate contracts, so clarifying their concept and the conflict of interest among them is a prerequisite for the organization to realize the contract management among stakeholders. For the concept of stakeholders, Freeman (2010) suggests that the groups or individuals who affect or are affected by the achievement of organizational goals are stakeholders in the organization, and classifies corporate stakeholders according to ownership, economic dependence, and social interests; Mitchell (1997) classifies stakeholders in a broad and narrow sense. These theories broadly classify stakeholders into shareholders, creditors, employees, customers, suppliers, government, community, etc. Among them, shareholders, creditors and managers, as the direct stakeholders with high ownership and economic dependence (contractors in contract theory), not only play a decisive role in the decision of financial resource allocation, but also serve as the pivotal link to other contracts and the core force to achieve financial goals. In terms of stakeholder conflicts, information asymmetry, contractual incompleteness and different objectives of each stakeholder result in multiple conflicts of interest between stakeholders of different attributes and stakeholders of the same attribute but at different levels, while the financial management function mainly plays the role of coordinating interests, i.e., seeking contractual equilibrium from multiple conflicts of interest in financial activities. There are three typical types of conflicts: agency conflicts between shareholders and managers, between large and small shareholders, and between shareholders and creditors. The agency conflict between shareholders and management lies in the separation of management and control, the agency conflict between large and small shareholders lies in the separation of cash flow rights and control, and the agency conflict between shareholders and creditors lies in the mismatch between control rights and risk taking.From the essence of Corporate Finance, we can see that the process of financial management is actually a dynamic game among stakeholders, that is, in a series of financial activities such as strategic planning, investment decisions, financing decisions, and operational decisions, through mechanism design and management control, a series of contractual initial conditions and buffer conditions are set and adjusted between the incentives or constraints of each stakeholder. Jensen (2001), Brickley et al. (2003) and Wang Bin (2015) proposed that this kind of incentive or constraint contract formulation, mainly based on the allocation of decision-making power, performance measurement and evaluation, and rewards and punishments incentives to establish a clear responsibility and rights relationship, through the assignment of stakeholders' responsibilities and rights, as well as the mutual influence of responsibilities and rights between stakeholders checks and balances to achieve corporate financial goals [4]. The financial objectives of the company can be achieved by assigning values to the stakeholders' responsibilities and rights and by checking and balancing the responsibilities and rights among stakeholders. Among them, the allocation of decision-making rights belongs to the company's ownership, control and power allocation within the organization, mainly to solve the problem of the separation of the operator's "business function" and shareholders, creditors and other "risk bearing function". This decision-making power allocation relationship is reflected in various levels, such as between shareholders and managers, between creditors and shareholders, and between operators and middle managers in the organization's section. The core issue of performance measurement and evaluation is to determine the performance of managers at all levels through a reasonable evaluation system, which provides the basic premise for solving the reward and incentive problems. The reward and punishment incentive problem is then based on performance evaluation to solve the problem of how to motivate and supervise agents to deviate from organizational goals in their actions [5].

References

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