A Study On Managerial Performance Evaluation And Managerial Incentives

Nowadays, it is an era of management. The lag of management theories is the main reason why management is hard to be enhanced. In this paper, a series of studies come from deficiencies in researches of performance evaluation, which are revealed by Relative Performance Evaluation Puzzle (RPE Puzzle). New understandings about performance evaluation are achieved via referring to conclutions from Axiology and studies about effectiveness. And current performance evaluation theories are improved. Further more, performance evaluation and managerial incentives are studied intetratedly. Studies in this thesis mainly include several aspects in following:Discussions in depth about evaluation in Axiology have positive significance on upgrading theories of performance evaluation. And effectiveness is widely used when evaluation is considered in practices. By considering the concepts of effective and effectiveness carefully, the nature of effectiveness is defined as a comparatively determinant result, which reflects people's willing in the comparative standard. In this perspective, we find that the effectiveness is an important problem in many research and application fields. However, it loses its balance in development among those fields. Therefore, a unified framework of effectiveness evaluation is established for mutual and interactive advances of evaluation practices in many fields. Through the establishment of this framework, we mainly focuse on elements ,definition and the process of effectiveness evaluation. The concept of performance measure is strictly distinguished from that of performance evaluation. Based on this framework, performance evaluation is a kind of value judgement, but performance measure is an internal step of performance evaluation. If paying more attention to performance measure while ignoring the comparison and determinant for final results, it will lead to limited utility that performance evaluation produces in practice. Therefore, theories of performance evaluation are improved based on conclustions from Axiology and studies on the framework of effectiveness evaluation in the thesis.Managerial performance evaluation is an important part of performance evaluation, which can improve the level of management in China positively, practically, and significantly. In the thesis, it is pointed that an important problem in nowaday managerial performance evaluation is that current evaluation standards can not reveal demands of market competition, while they ignore the impacts on the evaluation results from differences of basically objective conditions. Therefore, the current managerial performance evaluation is facing the difficulties and stresses that how to choose a reasonable standard and eliminate the impact of basically objective conditions in a dynamic way. Therefore, we illustrate a comparatively determinant method named managerial effectiveness, which can meet the above requirements and be adapted to managerial performance evaluation. The character of information provision by managerial effectiveness is innovatively analyzed and tested in the thesis. Also, managerial effectiveness is brought into the design of managerial incentive mechanisms by combining the principal-agent theory. An optimal incentive contract is deduced via a simple principal-agent model including managerial effectiveness. And five valuable inferences are received by the optimal incentive contract. Results from above studies show that managerial effectiveness can not only overcome the difficulties encountered in managerial performance evaluation but also provide new ideas for improving managerial incentive mechanisms.Relative Performance Evaluation Puzzle is a difficult problem in the field of executive compensation during the last 20 years. Based on the framework of effectiveness evaluation and practical documents, reasons of RPE puzzle are analyzed. And a new idea is put forward to resolve the puzzle. Managerial effectiveness makes the new idea become true. Two regression models testing evidences of relative performance evaluation are established. Using panel data and reasonable estimation methods, some evidences of relative performance evaluation are found out. This job not only has great significance in eliminating the puzzle, but also helps to promot the development of micro-economics and management practices.From a comprehensive perspective, in this thesis, a unified framework of effectiveness evaluation is established. Theories of performance evaluation are improved. Character of information provision by managerial effectiveness is analyzed and tested. The optimal incentive contract and its inferences including managerial effectiveness are established. A new explanation for RPE puzzle is provided. Therefore, the thesis that focuses on theoretical analysis also has some instructive significance in management practices.