Product Market Competition, Managerial Incentive And Firm Performance

After the 1980s, as the wave of acquisition,the correlation of product market competition, managerial incentive and firm performance was identified by some financial economists.This paper studies the influence of the product market competition to managerial incentive and firm performance, and the influence of the managerial incentive to firm performance.At first, the paper gives an overall review of the theoretical achivements of the correlation of product market competition, managerial incentive and firm performance, and introduces the theories about which that the managers have to be incentived. Then the background among product market competition, managerial incentive and firm performance is discussed. And the influence of the product market competition to managerial incentive is analyzed. Subsequently, we choose the data of the manufacturing listed companies to do the empirical study. The main works of this paper are organized as follows:①According to the theoretical analysis, we choose three financial index to measure the product market competition.②We classify the sample companies on the basis of the HHI ,and study the groups'difference by the independent samples t-test.③To examine whether there are changes in regression results, we study the influence of the product market competition to managerial incentive.④We use ROA and Tobin _Q respectively to measure the firm performance when we do the regression analysis between product market competition and firm performance,and the regression analysis between managerial incentive and firm performance.We conclude the results of the empirical study as follows:①Product market competition enhances managerial incentive and competition is multi-dimensional in its relation to incentives, including product substitutability,market size and entry costs.②Product market competition promotes firm performance.③Managerial incentive has a positive and significant impact on firm performance.At present, our country is in the economic transition period, and there are different characteristics in product market competition and managerial incentive.Therefore, studying the correlation of product market competition, managerial incentive and firm performance of the listed companies has an important realistic and theory value in advancing the development of economy and the reform of incentive principle, and promoting the healthy development of listed companies.