A Game Analysis On Long Term Incentive Of The State Owned Enterprises’ Manager Based On Reputation

With the establishment of the modern enterprise system, the ownership and management right of enterprise are separated. Due to the existence of asymmetric information, the principal-agent problem became the focus of public concern. As a economic man, principals’ target is to maximize enterprise long-term performance, the target of agents is to maximize their own interests, so the profit targes of agents and principals are not always consistent. How to design an effective incentive contract to eliminate the conflicts of interest between principals and agents and make the profit target of the agent consistent with principals’ target, how to solve severely short-term behavior of the state-owned enterprise manager, are important theoretical problems of principal-agent theory.On basis of a survey of China’s state-owned enterprise manager, in this paper, state-owned enterprise managers’ efforts are divided into four classes, the correlation between the managers’ efforts is considered. On the basis of managers’ efforts, the paper constructs current performance function and long-term performance function of enterprise. In addition, with China’s state-owned enterprise managers’ characteristic of dual identity, the paper constructs managers’ double reputation utility function based on market reputation and political reputation. And then, based on the manager responsibility system compensation form and the stock option compensation form, this paper analyzed managers’ behavior choice and optimal contract, proof that stock option compensation form can make the target of agents consistent with the principals’ and is helpful for the long-term development of enterprises. Finally, this paper verified the conclusion concluded through the simulation study, and researched influence degree how much relevant parameters affect the optimal contract, providesd the reasonable and reliable basis to design the optimal contract.