Study On The Large Shareholder’s Control And Managers’ Ownership Incentive

Agent theory which is based on the ownership dispersion assists the ownership isseparated with the control right. To solve this problem, the corporate must set up a seriesof incentive and restraint mechanism. Stock ownership incentive which coordinates theinterest of management and the shareholders is highly valued. However, Stock ownershipincentive effect is not good in China. This paper puts forward that the block shareholdercontrolling can explain this. So this article attempts to study the supervision and conflictbetween large shareholder control and the managers’ownership incentive.Based on2006-2010cross section data from SZSH, this paper analyzed thesupervision and conflict between state-owned and privately-owned, high-tech and nonhigh-tech companies. The consequence shows that monitoring exists in state-ownedcorporations obviously while conflict is in privately-owned companies. That means inprivate enterprise the more the large shareholder owns the equity, the more negativeimpact on the managers’ equity incentive and in state-owned companies, the ownership oflarge shareholder has an positive effect on the managerial ownership. Compared with nonhigh-tech enterprises, high-tech companies have conflicts between the large shareholderand managers. This suggests that the effect of managerial ownership stimulation is lowwhen the high-tech company’ ownership structure is concentrate. The result demonstratesthat supervision especially the conflict has an effect on the ownership incentive. Thisreminds us we must pay attention to the large shareholder when we carry out ownershipincentive mechanism.