The Research On Incentive Mechanisms Of Senior Executives In Private Listed Companies Of China

Incentive mechanism is the core issue of agent-principal theory. The incentive issues of senior corporate executives in our country have been the focus of attention, but there is still relatively little research on private enterprise incentive mechanisms. This paper has studied incentive mechanisms of senior corporate executives in the private listed companies from both theory and empirical perspectives. The study found that: in the incentive mechanisms of senior corporate executives in China's private listed companies, wages, bonuses and other cash incentives are the main means of incentives; the design and practice of long-term incentive mechanisms are not common. The positive correlation exists among corporate performance and the executives' rewards and the proportion of stock-holding, but the relevance is not strong. The incentives to senior corporate executives in private listed companies are insufficient. In the external incentive mechanisms, the manager market develops insufficiently, and the stock market is not perfect enough. To improve the incentive mechanisms of private listed companies, the private listed companies have to improve their executives' remuneration structure, focusing on the combination of short-term incentives and long-term incentives, and establish a good executives' stock-holding system. Some companies which have enough conditions should carry out stock options plan gradually. Externally, we must make great efforts to cultivate the manager market, and then the executives will be the real professional executives. Also, the governments need to improve policies and regulations, and establish a standardized and effective capital markets.