Explicit Incentives And Implicit Incentive For The Company's Performance Impact

Since the 19th century, incentive theory is one of the most important theories which have been focused by academia all the while. In the 1990s, this area became to be the core of the corporate governance.Especially in the beginning of this century, when the Enron scandals of WorldCom broke out, the governments have become to pay more attention on the expense of incentive theory. In this paper, we choose two explicit incentive factors, general manager wages and the share proportion of directors. And we also select seven implicit incentive factors, including the age, tenure, education level and multiple identifies of general managers, and the average age, sexual proportions of directors, and the proportion of independent director.So, under this ground, we build the incentive model, which is used for estimating the integrated influence from explicit and implicit incentive mechanisms, and makes in-depth study about the influence of these two mechanisms contributed to state-owned enterprises and private enterprise. Finally, based on the classification of company performance and nature, we also construct the General Manager Salary Model to discuss the decisive role of company performance and other incentive effect.We get several conclusions through the study. First, in the overall sample, the age and the tenure of general manager annually are negatively correlated with company performance. Meanwhile, the education degree and the salary of general manager, the share proportion of directors are related with firm performance. Secondly, during the comparative study of state-owned and private enterprises, we find that the age of general manager in state-owned enterprises is being the negative correlation with the company performance,which is opposite in the private enterprises. The salaries of general manager in the private enterprises are associated with the company performance. However, there is no obvious relationship in the state-owned enterprises. The average age of the directors have negative correlation with the performance of the company of in the state-owned enterprises, which is no obvious relationship in private enterprises. The share proportion in state-owned enterprises is positively correlated with performance, while in the private enterprises with no obvious relationship. Thirdly, we find that general managers possess multiple identities and higher wages in poor performance company, but in the good company performance, the manager pay levels are not related with their multiple identities. Lastly, in the state-owned enterprises, the general manager's tenure, the proportion of independent director are positively correlated with the salaries level, otherwise there is no obvious relationship between the average age of the board of directors and general manager wages. Diversely in the private enterprises, there is no obvious relationship except for the average age of the directors, which is positively associated with the general manager wages.