Case Analysis On Principal-agent Problem

The principal-agent theory is a vital part of enterprise theory, and principal-agent problem is a hit in the reform of private enterprises. The core of the theory is to reduce the agency cost caused by two factors: asymmetric information and interest conflict. Nowadays, the private enterprises have become more important than before in National Economics, but most of them are still family enterprises, which has become a barrier for their further development. In order to solve this problem, the private enterprises should establish modern enterprise system, which ask them to find out good ways to solve principal-agent problem. Under current circumstances, I think their best choice is to perfect internal restriction system. In this article, I take GTY Co.,Ltd for instance, analyze the reasons for its failure, and point out the most significant reason is: GTY co.,Ltd couldn't establish effective internal restriction system. Finally, I give some suggestions to GTY Co.,Ltd ,and I hope these suggestions can help GTY co.,Ltd and other private enterprises more or less.