A Study On The Mechanism Of Professional Managers Constraint

The problem of restraining Professional managers，with the development of cooperationsystem,gradually become the core of company governance. As a stock companydevelopment as the main enterprise organization, the specialized work needs moreprofessional knowledge operators and higher individual quality requirements, and there isgeneral phenomenon that the company’s operation right and ownership has be separated. Theproblem that how to ensure the professional manager for the owners of the company. At thesame time, the interest conflicting between professional managers and company’s others hasbecoming more and more seriously,along with the system of enterprises capital structuredevelopment.So the key point of the company management focus on how to restraint themisbehave of professional managersFirstly, this paper has a review about the former study on this issue.From acomprehensive view,there are four points.1. The " agency theory" provide a framework ofanalysis on the hypothesis of “rational economic man”,putting forward a contract design andproperty arrangement to solve the problems existing in the company management.2. Thestakeholders constraint structure provide server levels and multi-angles on this problemwhich can manifest the real influence in the enterprise operation activities3.From the point ofview of reputation, giving a additional way, help the constraint system of professionalmanagers more effective. Many scholars put reputation as another kind of capital, showing acomprehensive social evaluating to the managers’ personal.4.The market system mainly keepthe objective existence pressure up to the professional managers.,which could be considereda kind of strong rigid constraints. The fours have a common problem. That is the ignorant theparticipants of having multiply motives and behavior characteristics in economic activity.Therefore, further analyzing on this issue is necessary on the perspective of behavioralfinanceSecondly,I am trying to analysis the issue of the professional managers constraints onbehavioral finance perspective. There are mainly two aspects: One is the professionalmanagers are limited rational human. The main problems on the aspect are theoverconfidence, myopia and bad investment habit. After analyzing the causes of these， Iconclude the rational professional managers constraining system would conclude three points (1) It should be reflecting and restrict the irrational behavior before the matters,or couldavoid a big mistake in the investment (2) The moderate decentralization restriction isnecessary.(3) Constraining system need to have the valid methods on restricting toprofessional managers, even sort for some mandatory action. Other one is the analyzing onthe behavior characters of stockholders. Because the stock market constraining effect dependson the ration of the investors. As the analysis of the existing behavior characters,there aresome obvious irrational behaviors as follows: herd behavior, policy dependent bias,overconfidence bias, the hazard of over trading and loss aversion. These would weaken theconstricting function of stock market. According to explain these problems, I think a goodconstraint mechanism could reflects more initiative participating motives for constrainingprofessional managers and shows more strong constraint effect.Finally, based on the above analysis on the perspective of behavior financial. I have aconclusion as an "active stakeholders restriction mechanism” on this issue. This restrictionmechanism can make up the disadvantage on the irrational invest behavior of professionalmanagers and weaken external constraints, and can advance to the realistic and directinfluence on professional managers irrational behaviors,as well as a valid on certainrestriction of professional managers.Then I analysis the2006to2010years data on the124companies listed on Shanghai Stock Exchange,which is the non-state ultimate control,proofing the moderate decentralization as the “active stakeholders restriction mechanism”having a positive impact on corporate value. Then I put forward some opinions andsuggestions on the establishment of “active stakeholders constraint mechanism”, theeffective combination with related company’s governance mechanism, and the reasonableimprovement in a rule of law for government on this matter. In this constraint frame，professional managers will work for the company developments more reasonable and morescientific.