The Control Of Professional Managers' Moral Hazard——Research On Performance Evaluation And Compensation

With the deepening of the reform of the modern enterprise system, whose basic characteristic is the separation of ownership from managerial authority, the enterprises s managers own large control rights. And the problem of managers?moral hazard is inevitable, even very serious in our country. It has been an urgent problem how to control the managers?moral hazard. This thesis analyses the interest conflicts between the owners and managers. It also discusses how to evaluate the managers?performance and pay off the compensation according to the compensation philosophy 損ay for performance? So, we can control the managers? moral hazard, make the managers?action long梩erm, and foster the creation of enterprise抯 value through close alignment of the interests of the owners and those of managers. There is no question that this will be of great importance in constructing and consummating our country抯 modern enterprise system. This thesis includes four parts as follows: Part one, we argue that it is impossible to supervise the managers effectively for all kinds of limited condition. So the basic approach to control the managers?moral hazard is the evaluation of the managers? performance and the design of the compensation contract based on the performance measures. Part two, we discussed the base of the compensation contract? 梡erformance measures, especially the accounting梑ased. Part three, we study how western梕nterprises encourage the managers to work hard with different kinds of compensation contracts. Then, we discuss further how to set the total compensation amount and allocate them between managers, and how to supervise the allocation course in compensation practice. Part four: we first review our country抯 existing compensation contracts. Then, we analyze the quality of our country抯 performance measures. At last, we construct a compensation contract consisting of base salary, annual bonus and long梩erm incentives, which could control the managers?moral hazard in our country effectively.