The Study Of Design And Efficiency Of Incentive Contract Of China Handler Market

The historical evolvement of firm institution tells us that a theory which can explain handler incentive in a time may lose its explanation in other time due to the transition of economic system and firm institution. In China, together with the transition of China economic system, firms are experiencing the transition process from "Government's controlling type" to "Manager's controlling type", which leads to the transition from "officer type handlers" to "entrepreneur type handlers" correspondingly. However, the insufficiency of institution supply and supervision feebleness inner and outer firms lead to such phenomena as China economic efficiency paradox, explicit pay incentive paradox, and handler behavior distortion. Such phenomena should not be explained with single theory such as explicit incentive manner based on property rights theory and implicit incentive manner based on market competition because of both theories' failure in providing satisfactory answers to handler incentive problem. In one hand, property rights view lays emphasis on explicit incentive mechanism to handlers and ignores implicit incentive mechanism. In another hand, market competition view emphasizes the incentive and restriction effect of exterior environments, and neglects the premise of such effect works that explicit incentives reach a certain degree. Based on the reality of China transition and insufficiency research on handler incentive of existing theories, the thesis aims at improving incentive contract efficiency, and combines explicit incentive contract with implicit incentive contract to set up China handler incentive mechanism. Meanwhile, it transfers focal point from institutional aspect to technique aspect of incentive mechanism design, and considers seeking ways to resolve the handler incentive validity under information asymmetry.Based on human capital theory, principal-agent theory, agency cost theory and repeated dynamic game theory, the thesis brings to bear empirical research, normative research, comparative institution research and financial engineering to the design and efficiency of China handlers incentive contracts. By doing so, it advances such achievements asfollwoing:(1) to bring forward more practical and applied two phases of the handler heterogeneous human capital .That is to say, adopting market equilibrium analysis method of classical economics ascertains equilibrium price of the deposit of the handler heterogeneous human capital in the market .Then in line with equilibrium price, the thesis ascertains expect price of handlers through repeated game between handlers heterogeneous human capital and material capital base on the incomplete contract of the firm. Furthermore, compare to the incentive signification of "efficiency salary", the thesis emphasizes the incentive signification of "efficiency sharing" in the research of the handler equilibrium price.(2) Incorporating the variable of handler heterogeneous human capital into the contract of linear sharing, the thesis analyzes the effective of relative performance, dismissal menace and market risk variable on sharing coefficients, cost of incentive and cost of risk. It also expands the agent-principal theory and draws following analytical conclusions: ? Introducing relative performance variable, incentive designs enhance handler sharing degree of firm surplus, at the same time, reduce the cost of risk and incentive.(2)Through constructing the function of dismissal probability and incorporating it into the participation restriction and incentive comparative restriction, it proves that dismissal menace can all right take the place of explicit incentive in the condition of perfect market system. (3) Relating handler incentive designs with capital market portfolios, it proves that the incentive efficiency in sharing contracts will be reduced if handler can freely exchange portfolios with the nature of pay. So it is necessary to design system in order to properly restrict handler exchange of portfolios.(3) Through institutional analysis method, the thesis presents abundant and essential condition of complete competition model of handler market, and constructs the analysis framework of handler market, and generalizes distinguish principles of the efficiency of the handler market. At the same time, the thesis makes use of these principles to test pricing efficiency of China handler market.(4) Through econometric analysis method and Empirical research, the thesis tests determine factors of the pay of China listed company. Comparing with the previous research, the thesis gains achievements : (a) :to roundly analyze the relationship among the factors of influencing pay ,and to adjust some variables ,and to adopt the latest data , and consequently to improve expositive power of the factors of influencing pay.(b):firstly to sort regulatory industry and completive industry to test, which provides instructional suggestion for the reform of China regulatory industry of being in the plight in the design of pay.(5) Making use of relative performance idea and financial engineering method, the thesis puts forward the new incentive instrument to remove noise: multi- factor relative index stock option and portfolio pay base on relative performance. ?In contrast to fixed index stock option, multi- factor relative index stock option eliminates the part of noise and improves incentive efficiency through alterable benchmark price substituting fixed exercise price. In contrast to absolute index stock option, beta coefficient of relative index (the sensitivity of option to stock price) is higher than beta coefficient of corresponding absolute index, that is to say, relative index stock option more effectively induces handler to take risk project than absolute index stock option does. ?Through relative performance portfolio pay design, pay schemes eliminate the influence of the noise, that is to say, pay schemes eliminate the effect of industrial fluctuation and market fluctuation on pay. At the same time, the new incentive instruments also eliminate costs of resulting in individual preference.Finally, according to latest development of behavioral economics and psychology, the paper also puts forward the mind that incorporates latest achievement of those theories into the analysis framework of agent—principal theory and agency cost theory.