Research On Correlation Of Company Performance And Management Entrenchment

Managers as an economic man to the individual utility maximization as the goal of the decision behavior, and to maximize shareholder value of the company’s goal is different. When conflict exist, the manager will get their own selfish behavior to meet by sacrificing owner utility, which will damage the performance of the company. The traditional agency theory thinks that as long as we can design a set of effective incentive mechanism can alleviate the contradictions, but the reality proved that agent contradiction is still serious. Managerial entrenchment hypothesis has opened up new ideas for the management agency problem, the defense is refers to the enterprise internal and external control mechanism. Managers want to maintain its position selection and pursue their own utility maximization through Managerial entrenchment. Company in two right separated condition, the final decision’s rights enable managers to master the important matters, management entrenchment by having influence on the structure of capital, situation of dividend distribution and investment eventual damage the performance of the company. Management entrenchment objective existence and in the special background of China’s "big stock" and "the absence of the shareholder", it tends to become more serious.Based on the management entrenchment related theory and literature review, the paper explores the correlation between management entrenchment and performance of the corporate. From the theoretical point of view, the factors related as the breakthrough point, from the managers of their own characteristics, motivation characteristics and supervision characteristics of the three aspects. Age, two post setting and ownership concentration other five indexes were selected for discussing the direction and degree of these factors to the performance. From the mathematical research, the paper select samples from the data of China’s A shares of listing Corporation in 2013 and establish the regression model. Finally, I put forward some corresponding suggestions to strength the managers’ construction of the selection, training, incentive and supervision to reduce management entrenchment production.