Study On The Control Of Government Cost In The Perspective Of Principal-Agency Theory

First time in history, the reduction of administrative costs has been proposed and taken as one of the goals of deepening the reform of the administrative system in the 16th National Party Congress report. The Lowering of administrative costs contributes to the building of a highly efficient government, fair government and clean Government. As the local government at the Township level is the most direct and primary chain linking with the public, Strictly control of their administrative costs is the key to improve administrative efficiency , regulate government activities, fight against corruption and rent-seeking and erect a good image of the Government.This thesis gives a definition of the administrative costs which includes its connotation and extension at the perspective of principal-Agency Theory . After The "unreasonable cost" is introduced, the "moral hazard" is researched as internal variables and so is the possibility of "moral hazard". It is concluded that the "moral hazard" is the main factors causing high administrative costs.The article with the assumption of the "rational economic man" theory and the use of Excel statistical software to carry on quantitative analysis and interpretation of results concludes that agent-problem is the major factor caused the high cost. The reasons for excessive administrative costs in S town is analyzed in the third chapter . It is found that the following factors affect:the vacancy of early clients, and the moral hazard activities of the first agent, the moral hazard activities of the ultimate agent and the conspiracy between higher-level clients and the ultimate agent. In the last chapter the main mechanism to control the administrative costs of China's township is proposed as following: 1. Establishment of a sound system to ensure the early return of principal; 2. Decentralization, the return of the first agent power; 3. Separation of the Party and the government, building integrity of the agent eligibility;4. Information public, the reduction of the information asymmetry between clients and agents ;5. Thinning budget revenues and expenditures, standardize the final acts of an agent;6. The establishment of e-government, enhance the early participation of the client;7. The development of a cost indicators, carry on triple assessment.