Research On Managers' Decision-making Behaviors Based On Incentive And Monitoring Mechanisms

It is the sustainable development power of enterprises to strengthen the monitoring and prevent risk. A survey of USA shows that 80% of enterprises are implementing continuous monitoring. While in china, the failure implementation of internal control force us to carry out the continuous monitoring to solve the problem.With the coming of information technology era and the changing business environment, the risks become more complex and the data is overwhelming. All these lead to increase the difficulty of corporate risk management with the traditional monitoring ways. In order to enhance managers'efforts towards owner's interests and the ability to risk, the concept of continuous monitoring has been attention and development. Continuous monitoring use advanced computer technology to support real-time monitoring of the ordinary course of business enterprises. Continuous monitoring is especially useful for monitoring and controlling fraud risk, because of the fraud risk identification need real-time data for comparison. Obviously, continuous monitoring can reduce the agent's earnings management behavior and the information asymmetry tendencies.Researches indicate that incentives and monitoring mechanisms must be combined in order to better encourage managers to work, because the incentives can not effectively constrain the behavior of managers without monitoring. Researches also show that different levels of incentives guide managers different decision-making behavior of investment, long-term incentive will encourage managers of business develop long-term investment. In this paper we first describe related theories of continuous monitoring. On the basis of theoretical analysis we propose two hypotheses. Then we design questionnaire to verify these hypotheses. At last, we give some suggestions for enterprises formulating countermeasures according to their situation. The results showed that long-term incentives can promote the application of continuous monitoring, so companies should focus on the application of long-term incentives.