Allocation Of Financial Rights: The Basic Function Of Modern Finance

(1) financing - the process of inflow of financial power.

Fund-raising activities refer to

The financing of enterprises mainly comes from the owners and creditors of the enterprises, and the capital derived from the owners of the enterprises form the capital of the enterprises. The funds derived from the creditors of the enterprises form the liabilities of the enterprises. The capital and liabilities of the enterprises are two completely different concepts, and the property rights and obligations embodied by them are totally different.

The owner's capital is the owner's rights and interests, and the creditor's right of the enterprise is the property right owned by the creditors of the enterprise.

Due to the differences of rights and obligations reflected by different sources of funds, the ratio of capital to liability of enterprises will inevitably lead to differences in the structure of property rights and property rights.

Obviously, the essence of corporate capital structure is

In short, the purpose of fund-raising activities is to ensure that the needs of investment funds and capital structure are reasonable. To achieve this goal, the capital structure will reach the optimal state only if the financial rights of enterprises are reasonably allocated and the allocation of financial rights is reasonable.

(two) investment - outflow of financial power (allocation)

Enterprise investment activity refers to the process of putting funds raised in and out of the enterprise reasonably, and it is the central content of financial management activities.

The financial right flowing from the fund-raising activities has been pformed into the capital of the enterprise inside the enterprise.

But the pformation of financial rights has not changed the essence of financial rights, that is, financial power is still attached to a specific principal.

In this way, the adjustment of principal investment and investment is actually a process of allocation of financial rights.

The purpose of investment activities is to maximize the investment income. The investment income here includes the internal operating income and the external investment income.

Therefore, only by making financial outflow (allocation) reasonable, can investment income be maximized.

In order to make the outflow of financial rights reasonable, the enterprises that invest in the market should be independent market participants. Only when the market participants are owners of independent property, will the market participants strive to grasp and comprehend all the information that will affect the market price for their own interests and take corresponding actions immediately so as to achieve diversification in the investment activities, and consciously abide by the principle in the investment activities: pursue the minimum risk under the established income conditions, and pursue the maximum return under the established risk conditions.

Therefore, effective investment activities should be the process of rational allocation of financial outflows by market participants with independent financial rights.

(three) financial regulation -- the reorganization of financial rights.

The financial adjustment of enterprises is mainly aimed at the poor assets combination of enterprises, or although the assets portfolio is initially good, but after the production and operation, there is "hardening" or "settling", the readjustment of the existing assets is conducive to the realization of the financial objectives of enterprises.

Its main performance is the reorganization of assets of enterprises. Asset reorganization refers to the mutual adjustment and change of the legal person's property rights, investor's ownership and creditor's rights in accordance with the maximum value added of capital, and recombines industrial capital, financial capital, property right capital and intangible capital.

However, the rescheduling of assets portfolio is not done directly, but by changing and optimizing capital structure from stock, and then changing the assets portfolio of enterprises according to capital input.

Therefore, financial regulation is essentially a process of "change" and "re change", that is, a "Negation" of "Negation" and "Negation". It is precisely the rejection of the law of negation that makes the capital operation of the enterprise ring together, forming a virtuous circle.

While the negative rule is applied, it is also the process of reconfiguration of financial rights.

To sum up, financial regulation can be regarded as a re investment (stock adjustment) of investment results (assets portfolio). From the perspective of financial rights, it is the optimization and reorganization of enterprises after the outflow of financial assets.

(four) income distribution - allocation process of financial rights

Income distribution refers to the division of the total value of surplus value created by enterprises within a certain period of time between the main stakeholders inside and outside the enterprise.

According to the theory of enterprise contract, shareholders are the investors of equity capital, creditors are the investors of corporate debt capital, managers and employees are the input of enterprises' human capital.

According to the contract: shareholders share dividends, creditors share interest and principal, managers and employees share wage rewards.

Dividends, interest and wages are the result of the investment activities of enterprises, that is, the use of financial power.

Therefore, financial allocation is the process of distributing the results of financial rights among various stakeholders, that is, the distribution process of financial rights.

On the other hand, financial allocation is also the right way to deal with the political functions and economic functions of the state. It is the basic means to deal with the material interests of investors, managers, managers and employees.

Therefore, financial allocation is also a process of dealing with property rights relations.

(five) Financial Supervision -- the disposition of financial supervision right

Financial supervision is to check, control and supervise the legality and rationality of financial activities of enterprises according to the laws and regulations of the state and the internal financial budgets and rules and regulations of enterprises.

In order to give full play to the function of financial supervision, the right of financial supervision must be allocated effectively.

The power of financial supervision is decentralized in the company. There are two main supervision systems: one is the internal financial supervision system, including horizontal financial supervision, vertical financial supervision, internal audit supervision and staff financial supervision.

Among them, horizontal financial supervision is the financial supervision and restraint behavior between the internal parallel organizations of the corporate governance structure, and the longitudinal financial supervision is the financial supervision and restraint behavior of the higher level organizations or individuals within the company to the lower level organizations or individuals, such as the financial supervision of the board of directors to the management team.

The two is the external financial supervision system, including the financial supervision of the government, the financial supervision of the investor, the financial supervision of the creditor and the financial supervision of the CPA.

Only by properly configuring the right of financial supervision among various agencies can we form a sound supervision system and effectively implement financial supervision.

To sum up, fund-raising activities are the allocation process of financial rights, and investment activities are the allocation process of financial rights. Financial regulation is the reorganization of the distribution of financial rights, while income distribution is the allocation of the above financial rights.

In addition, the core of financial supervision is the arrangement of financial supervision right.

In this way, the specific functions of fund-raising, investment, distribution, regulation and supervision all reflect the allocation of financial rights of enterprises. Therefore, we can also take the allocation of financial rights as the basic function of enterprise finance.

We once considered the allocation of resources and financial supervision as the two basic functions of finance, and considered that the relationship between them is: financial supervision in the allocation of resources and allocation of resources in financial supervision.

We believe that financial supervision is the extensive supervision of resource allocation process. Financial supervision right is an important part of financial power and an important part of financial power allocation.

Later, our research further found that in the allocation of financial resources, such as fund-raising, investment, regulation and distribution, there is a different allocation of financial rights besides the supervision power (as mentioned above). Therefore, we put the right of financial supervision into a larger and more precise category of financial power allocation, which is also in line with resource allocation, and more in line with the characteristics of our research on the combination of value and power, and more in line with our idea of "financial flow".

Of course, we regard the allocation of resources and the allocation of financial rights as the basic functions of finance, and do not consider them two distinct functions.