Study On The Incentive & Restraint Mechanism For The SOES' Managers

For the reason that the State-Owned Enterprises (SOES) are the fundamental to national economy and the managers lie in the core of the firm, role of SOES' managers is very significant. But no one can deny the fact that the incentive & restraint mechanism for SOES' managers is low efficient. With the coming of the era of knowledge-based economy, human capital is playing the leading role in economic stage. So establishment of the incentive & restraint mechanism for SOES' managers is not only the realism choice but also the development trend.As usual, we argue that the SOES' problems originate from the separation of ownership and control. Because of the separation, there arise the problems of incentive incompatibility, information asymmetry, and liability disproportionality between the owner, i.e. the state, and the managers. Then insider control has arisen. Most researchers attributed these problems to lack of incentives and restraints. As a result, the reform measures focused on the improvement of incentives and restraints. Although achievements are remarkable, such as the practice of annual salary system, executive stock option etc. as a whole, the incentive & restraint mechanism is not established, and the SOES' performance are still poor. This paper probed into the issue.The evaluation of manager's initiatives and monitoring of his implementations directly and indirectly depend on the information obtained from competitive markets. Therefore, the institutional foundation for an effective incentive & restraint system is the competitive market Only on base of the complete competition, revenue-pay mechanism, inside-govem mechanism and ethic-spirit mechanism can perform correctly.To sum up, the solution to those problems is to establish a mechanism that is marketable, compositive, organic and classified.On the guide of this thinking, this paper is composed of four part (seven chapter), there are: (1 introduction; (2)Analyze on the incentive & restraint commonly. (3) Analysis of four incentive & restraint mechanisms. (4) Generally analyze on integrative mode.