Why do entrepreneurs in China always make mistakes when making decisions? The most fundamental reason is the improper allocation of financial power and the lack of perfect financial decision-making, implementation and supervision mechanism within enterprises. Almost all failed decisions are made at will.
The giant group company lacks the decision-making mechanism of democratic decision-making and scientific decision-making. It is arbitrary and goes its own way. In form, it pursues the military way and engages in "three major battles". Not only the giant group, but also the decision-making system of most domestic enterprises is basically arbitrary. No one can stop Jiang Wei's "romanticization, fuzziness and impatience in decision-making", and no one can question Wu Bingxin's grand goal of "1999, the annual sales of the third factory reached 90 billion yuan".
Most enterprises in China are entrepreneurs, owners, decision makers and executors, and the board of directors exists in name only. The combination of these conditions and strengths will inevitably make China entrepreneurs have the highest chance of making business mistakes and making decisions in the world.
Theoretically speaking, financial governance refers to a system composed of financial decision-making power, financial execution power and financial supervision power. At present, the allocation of financial governance power in China is extremely irregular, and there are the following problems:
First, excessive centralization and decentralization of financial decision-making power coexist, and the relationship between centralization and decentralization has not been properly handled. First, excessive concentration of financial power. Financial power is excessively concentrated within the group, and the financial governance rights of stakeholders outside the group are often despised. In particular, banks, as the main fund providers of enterprise groups in China at this stage, have not yet the right to participate in corporate financial governance, and the internationally accepted financial mechanism of camera governance has not yet been established. Financial power is excessively concentrated in a single internal management level and individual, and the internal distribution and restriction mechanism of financial decision-making has not yet been established. In most group companies, the chairman and general manager are appointed for two terms, and the meetings of the board of directors and managers overlap. And when making financial decisions, it is usually the chairman or general manager who has the final say. Due to the excessive concentration of financial power, the decision-making of enterprises is not only dictatorial but also subjective. In practice, there are countless examples of bankruptcy failure caused by such a decision-making mechanism. The second is excessive decentralization. One is that the financial power of subordinate units is too large, which leads to the chaotic operation of group funds, unreasonable investment of funds and serious waste of funds. Second, there is no effective supervision and restraint mechanism for the financial rights of subordinate units, which leads to the abuse of financial rights by subordinate units and excessive consideration of their own interests. Many people praise Enron's internal decision-making power as much as possible. However, after Enron went bankrupt, this "experience" just turned into a lesson: under the decentralized system, people who hold "cheese" are often not outsiders, but their subordinates or subsidiaries.
Second, the financial supervision power is empty, and the financial restraint mechanism is not working well.
It is mainly manifested in three levels:
(a) the level of supervision within the enterprise. (1) The board of directors is "empty shell" or "in name only", which lacks an effective restraint mechanism for the management. In state-owned enterprises, the board of directors is often controlled by the management and becomes a tool for the management to achieve its goals. (2) The board of supervisors has the responsibility but has no right to supervise Fan Li. (3) Internal audit did not play a role. Most internal audit institutions are entrusted to the general manager, who is a functional department parallel to finance and mainly serves the operation and management of enterprises. It is difficult to supervise and evaluate the economic responsibility of the company's financial manager and general manager, and its financial supervision role is limited. (4) The internal staff supervision is absent in organization and function, and the workers' congress exists in name only.
(2) At the level of government supervision. There are three forms of government supervision: accountant appointment system, chief financial officer system and external board of supervisors system, and the operators are externally supervised as state investors. However, these forms have their shortcomings, such as the unreliable premise of appointing accountants, directors and supervisors to perform their duties; There are problems in the re-supervision of appointed personnel.
(3) Social supervision (or folk supervision). The CPA's audit of the financial statements of enterprise groups is also a mere formality. A series of financial fraud incidents, such as "Enron Incident" and "Yinguangxia Incident" in China, made people begin to doubt the role of certified public accountants as the "gatekeeper" of market economy. The financial supervision of banks and other creditors is absent in organization and function, and there is no camera governance mechanism.
The allocation of financial governance rights is the core of financial system, and the effective separation of financial governance rights must be realized. Specifically:
First, rationally allocate financial decision-making power. The key point of management lies in decision-making, and the effect of decision-making first depends on the allocation of decision-making power. Theoretically, the company's financial decision-making power should be concentrated in the shareholders' meeting and the board of directors. However, in practice, the financial decision-making power owned by the shareholders' meeting and the board of directors is partially delegated to the managers. This needs to study the division and distribution of financial decision-making power among shareholders' meeting, board of directors and manager's meeting. Generally speaking, financial decisions can be divided into two categories: one is financial strategic decisions; The second is financial tactical decision. Even under the authorization system, the strategic decision-making power of finance must be concentrated in the shareholders' meeting and the board of directors, while the general or daily financial decision-making can be delegated to the manager. Under the modern enterprise system, the company is like a stadium, and the team leader, coach, athletes and referees must have a clear division of labor and cannot be offside. A company, including a group company, must also define their respective rights and responsibilities in decision-making, management, operation and supervision. Decision-making power, especially the decision-making power and control power of financial strategic arrangements should not be delegated. Decentralization of decision-making power will inevitably lead to vassal phenomenon and control failure. Centralized system of strategic decision-making power is a rational choice under the company system.
Secondly, the financial executive power should be rationally allocated. The general manager and financial manager of the company are responsible for the implementation of financial decisions and undertake three functions: the board of directors authorizes daily financial decisions; The board of directors makes financial strategic decisions and draws up plans; Responsible for implementing the financial strategic decision-making plan formulated by the board of directors.
Third, rational allocation of financial supervision. Financial supervision is to check, control and supervise the legality, rationality and efficiency of financial activities, financial revenues and expenditures and various economic activities of enterprises according to national laws and regulations and internal budgets and systems of enterprises. The power of financial supervision is decentralized, and there are two major supervision systems: one is internal financial supervision system and the other is external financial supervision system. From the perspective of international practice, the internal financial supervision of enterprises is generally a criss-crossing composite system designed according to the principles or logic of separation of institutions, separation of rights, division of responsibilities and mutual restraint. According to the existing corporate governance structure in China, taking into account the principal-agent chain of shareholders' meeting-board of directors-general manager-department manager, a board of supervisors and an internal audit are set up at the same time, and an audit committee is set up under the board of supervisors to communicate with external independent audits, thus forming an internal financial supervision system centered on the board of supervisors. (1) Financial supervision of the board of supervisors, the board of directors and the general manager. The Company Law has clearly stipulated that the Board of Supervisors is the supervisory body of the company, and its members are produced by the shareholders' meeting to supervise the financial activities of directors and managers on behalf of the shareholders' meeting. It can be seen that the board of supervisors comes from the principal-agent relationship between the shareholders' meeting and the board of directors, which is at the highest level in the financial supervision system and the center of the whole system. According to the Company Law, the Board of Supervisors has the right to check the company's financial affairs, supervise the acts of directors and managers who violate laws, regulations or the company's articles of association when performing their duties, and have the right to require directors and managers to correct their acts that harm the company's interests. The board of supervisors is directly responsible to the shareholders' meeting, and its goal is to ensure that the financial objectives of the general manager and the owner are consistent; The board of directors supervises the general manager on behalf of the owner, with the goal of ensuring that the financial objectives of the general manager and the owner are consistent; The general manager carries out financial supervision on the financial manager, the goal of which is to ensure that the financial manager is consistent with the financial management objectives of the enterprise and to ensure the financial management quality of the enterprise. (2) Supervision by the Audit Committee. In our country, the management usually hires an accounting firm to audit the financial report and express opinions, so the mechanism of verifying the financial report through the firm and then supervising the management of the company cannot play its due role. In this case, setting up an audit committee to hire an accounting firm, discussing the audit scope, expenses and requirements with auditors, and resolving the conflict between auditors and enterprise management authorities can form a supervisory force between management and external independent audit, and enhance the independent certification function of external audit. It can be seen that the position of the audit committee should be to supervise the relationship between management and external personnel in internal financial evaluation, and its duty is mainly to ensure that these external personnel can express their opinions fairly and avoid being controlled and used by management authorities by independently hiring accounting firms, external audit institutions and independent financial consultants. (3) Internal audit supervision. Internal audit generally plays its supervisory, evaluation and service functions by auditing the efficiency and effect of production and operation, the organizational structure of audit and the effectiveness and perfection of internal control system. From the perspective of supervision, the internal audit institution comes from the agency relationship between managers and subordinate departments, and can be positioned to supervise the financial activities of managers' subordinate departments. The deviation of managers' behavior can be corrected by the superior financial director. In this way, the responsibilities of the internal audit institutions mainly focus on: checking the applicability and effectiveness of the internal control system and putting forward suggestions for improvement; Check the reliability and integrity of all kinds of information; Check the implementation of policies, plans, regulations and decrees by the unit; Check the safety of assets, the saving and effective utilization of resources, etc. (4) Staff supervision. Financial supervision through factory affairs publicity, workers' congress, workers' decision-making system, and participation of workers' representatives in the board of supervisors also belongs to the category of internal financial supervision. External financial supervision system Under the condition of modern market economy, the financial management of enterprises generally adopts self-discipline system, but at the same time it must be supplemented by external supervision system with complex structure. Including: the financial supervision of the government. Even under the condition of market economy, it is necessary for the government to intervene and control the financial behavior of enterprises by administrative, legal and economic means. For example, in order to avoid repeated investment and blind construction and achieve its environmental protection goals, the government guides and restricts the investment behavior of enterprises through administrative examination and approval and industrial policies. Financial supervision of investors. Even under the system of separation of the two powers, the investors of the enterprise will still retain some corporate governance rights, especially financial control rights, including: selecting operators and chief financial officers; Participate in major financial strategic decisions; Implement financial supervision; Participate in income distribution and decide to reinvest. Under the condition that the property right of legal person is established, the investor's finance is mainly a supervision mechanism to ensure that the financial behavior of operators is consistent with the investor's goal. Financial supervision of creditors. The traditional relationship between creditor's rights and debts is just a relationship of repayment of principal and interest. Under the condition of modern market economy, the nature and content of the relationship between creditor's rights and debts are changing. The appearance of camera governance mechanism enables creditors, especially banks, to obtain partial financial supervision and control over enterprises. Financial supervision of certified public accountants. This is the main form of market-oriented financial supervision. The audit and verification activities of certified public accountants are an important guarantee for the operation of enterprise financial norms.
China enterprises must realize the effective allocation of their own financial governance rights as soon as possible, and establish a set of perfect financial decision-making, execution and supervision mechanisms, so as to reduce the chances of business mistakes and decision-making mistakes and make China enterprises go further.