Incentive Contract Design For Manager In Food Listed Companies Under Shareholder Superiority

In an increasingly serious food safety issue, managers of food listed companies damage seriously the consumers'interest, which leads us to question the reasonableness of incentive contract for managers of food listed companies. According to "stakeholder theory", stakeholders give the enterprise essential specific investments for development, and the growth of any business is inseparable from their support. Thus, managers should not only serve the interests of shareholders, but also take into account the interests of other stakeholders. Otherwise, when the interest is damaged, the other stakeholders will withdraw specific investment, which causes a serious negative impact on enterprise development. Therefore, the purpose of incentive contract for managers of food listed companies contains two aspects:one for managers to increase shareholder value; the other hand, managers should concern to promote the interests of consumers and pay attention to food safety control. All of this is important for improving corporate governance, promoting the orderly development and stable economic growth.Based on the above understanding, the article according to the relationship among managers, shareholders, consumers and government regulatory agencies, we summarize two characteristic of corporate governance of food listed companies, which is a double principal-agent and shareholder superiority. Next, model two characteristic, build shareholder superiority and principal-agent model to analyze the incentive equilibrium conditions for the managers of food listed companies, and we also solve the second-best optimal incentive coefficients which is provided by shareholders and government regulatory agencies, and then focus on the relationship between the second-best optimal incentive coefficients which is provided by shareholders and government regulatory agencies and test the effects of the volatility of the performance and synergy of tasks on second-best optimal incentive coefficients considering shareholder superiority, and have an empirical test with food and beverage industry panel data. Finally, the results show that food listed companies generally have established pay incentives mechanisms linked with the company's operating performance, but the government has not established the incentive and restraint mechanisms associated with food safety control, which may induces management to put excessive focus on the operating results and ignore food safety control. Meanwhile, when the government regulatory agencies provides a negative incentive, the greater the volatility of financial performance, the smaller the incentive coefficient provided by shareholders, and the magnitude of changes will gradually decrease because of shareholder superiority:the greater the volatility of food safety control performance, the bigger the government the incentive provided by regulatory agencies, and the magnitude of changes will gradually become larger because of shareholder superiority" the greater synergies between the two tasks, the smaller the incentive coefficient provided by shareholders, the greater the coefficient provided by government regulatory agencies and the magnitude of change of the incentive provided by shareholders is reduced by shareholder superiority, the magnitude of change of the incentive provided by government regulatory agencies is increased by shareholder superiority. In short, shareholder superiority can reduce magnitude of changes of shareholder incentive coefficient and increase magnitude of changes of government regulators incentive coefficient. In further study we find that strengthening the chairman doubling general manager, increasing the number of shares the board of supervisors has, is conducive to encouraging operators to make more efforts on food safety control.Our innovation is the following:First, perfect the incentive contract design ideas and content, so that the incentive contract goal is not only the interests of shareholders, but also the interests of other stakeholders. Second, based on the industry characteristics that food listed companies are powerfully supervised by the government, we summarize two characteristics of the corporate governance of food listed companies:double principal-agent and shareholder superiority. Third, based on two major characteristics of corporate governance, we build up a double principal-agent model which contains shareholder superiority on the basis of the multi-task principal-agent model. In expansion process of multi-task principal-agent model, we change the production function into a linear function about two efforts, and add shareholder superiority which measured by management preference coefficient creatively in income production. Fourth, we use theoretical model, econometric model, which not only ensure the reliability of conclusions and further make useful supplement to research methods of the existing literature.