Incentives Of Executive Behavior

Corporate governance efficiency is mainly means how the principal can efficiently solve the problem of agent behavior. Modern enterprises have adopted various methods to eliminate agent behavior, ranging from management selecting mechanism, incentive mechanism, market competition mechanism and information supervision mechanism. For the purpose of encouraging management to reveal crucial information about enterprise's effective operating, this paper based on the combination of Mechanism Designing Theory and Behavioral Economics Theory, further it built incentive mechanism which can encourage management to "tell truth". According to previous frame of theory and another variable of psychology incentive, this paper built a game model of analyzing principle-agent and made a condition that management should reveal vital information about the quoted company. That is, change coefficient in contract of management incentive should be improved and should be higher than degree of cost has been increased under asymmetric information. Stated differently, the proportion of outstanding achievement which is participated by management should be offset the cost of revealing true information.This text includes the introduction and four chapters. The introduction is mainly explain the meaning of this research, some concepts, such as management , corporate governance structure, etc, the methods of this research ,such as normative research , positive research etc. In the first palace on the basis of literature review, I analyzed three theories related to incentive mechanism of management behavior. Secondly, management behavior has been discussed at length from three aspects. In addition, the thesis focuses on incentive efficiency of quoted company in China by the means of positive research and the data of Shanghai market. The result of positive research reveals that there is lack of effective incentive mechanism. We must move our attention to management incentive of quoted company for improving corporate governance efficiency under the present status of incentive. Last butnot least, based on the result of information economics, management incentive mechanism of quoted company model has been formulated in this paper and additional psychological parameter has been discussed.