Executives Of Listed Companies Ways To Motivate Empirical Research

The research on the executive compensation has continued for many years since the reform and opening-up from 1978, but it still has not solved the incentive problem due to the constraints of political and economical condition. Then, the executive incentive problem has been a hot issue in the research of corporate governance since the 1990s. This thesis, based on the basic decision principle of incentive problem, thoroughly discussed the selection of performance evaluation mechanism in executive incentives on account of our listco market condition, and conducted a rigid theoretical proof and empirical test on the primary hypothesis of the designation and selection of incentive plans in product market.In chapter II, this thesis gives a brief introduction on the basic theory of Principal-Agent problem and Game Theory, which follows by a retrospect on the derivation and development of the Principal-Agent theory and the game-theory application on the product market competition. In the chapter III, I derive the primary hypothesis of this paper based on the game-theory model embedded with the principal-agent problem, and deduce the hypothesis with a fine mathematical proof. In this sector, I argue the view as follow: Allowing for the oligopoly market condition, the listco shareholder will prone to select the use of absolute performance evaluation instead of the relative performance evaluation on the issue of management incentive. Then, in the sector IV, I apply the panel data regression model the sample database after the filter of low concentration industries by CR and HHI measures, and conclude the empirical test result. The result, which depicts the market practice between 2004 and 2006, suggests a significant positive coefficient in the measure of absolute performance and an insignificant of negative coefficient in the relative performance measure which testify our hypothesis of the abandonment of RPE on management incentives in the oligopoly market. In the final chapter V, I give two suggestions on the designation of incentive mechanism: firstly increase the weight of absolute performance evaluation in incentive plan, secondly devise an appropriate evaluation system to perceive the effort of management's hard-work. In conclusion, the shinning points of this thesis consist of these follows: Discusses the influence of product market condition on the selection of management incentive mechanism, and gives the theoretical proof of how the interaction on the production strategy will affect the management incentive, and finally empirically testify the hypothesis with the recent data of Chinese listcos. However, considering the imperfection of the disclosure of liscto information, our research is probably sensitive to the change of timeline selection, which should be improved in the future research.