A Research On The Equity Incentive Effect Of Shanxi Merchants’ Labor-sharing System

The labor-sharing system was first created by the Shanxi Merchants in China. It means that the general manager and other staffs can get the labor-stocks without giving out any capital but their labor and talents. Then during the closing period they can equality gain the profit which was brought by the monetary capital. The Shanxi Merchants’using the labor-sharing system in their enterprises shows that they recognize the labor capital of the employees. And the employees have the right to share the profit of the enterprise. In Shanxi Merchants’enterprises the investor grasps the ownership of the enterprise but the manager care about the management. They adopted a strictly mode of the separation of ownership from management. Under this management mode, it will lead to the information asymmetry. By using the labor-sharing system, it can make the principals’interests consistent with the vicarious’and fulfill the goal of profit-maximizing. By comparing the labor-sharing system with modern incentive system, the labor-sharing system is not only similar to the modern equity incentive system has the function of inspiring and constraining the proactive of the management, reducing agency cost but also has some special properties. Taking the modern incentive system as a reference, we don’t have the purpose to make sure which one is better but to try to learn something from them. While learning from the West, we can take the essence, goes to its dregs and gain the experience from the traditional Chinese national characteristics of the management system. This paper is divided into five parts:The chapter1introduces:the literature review, research method and the basic structure.The chapter2mainly introduces the theory of the Shanxi Merchants’labor-sharing system and modern incentive system. The introduction of the Shanxi Merchants’labor-sharing system includes:the origin, definition and operation mode. The introduction of the modern incentive system includes:employee stock ownership plan, management buyouts, restricted stock, phantom stock and stock appreciation rights, deferred payment plans, performance shares and other forms and modes of operation.The chapter3discusses incentive and restriction mechanism of Shanxi Merchants’ labor-sharing system. On the incentive mechanism side, it considers the labor-sharing system’s material and spiritual incentive to the manager and ordinary employees by suing the principal-agent theory, incentive theory and human capital theory. On the restriction mechanism side, it considers the restriction function about "local people strategy", the strict number regulation, excavates the extension agent credit cycle and" hostage" to the" credibility" pledge.The chapter4mainly introduces the special points of labor-sharing system. After comparing the labor-sharing system with the modern equity incentive system, the authors found that the labor-sharing system has many special points as follows:from a longer holding period to achieve the maximum incentive effect, equity beneficiary is wide, forming agents between the supervisory situation, thereby reducing the agency cost; the implementation of the operation condition is relatively simple, can use the enterprise to increase greatly.The chapter5introduces the enlightenment which was derived by studying the labor-sharing system including the enlightenment for the modern corporate governance and the modern enlightenment of equity incentive.