The Substitution Effect Of Incentive And Supervision And Agency Cost Optimization Analysis

Since the 19th century, with the development of the company type enterprise, the principal-agent phenomenon is very common. The agency cost problem caused widely attention and study. Reading a lot about the documents of corporate governance,we will find that the existing literature often choose a single incentive mechanism of the relevant variables or part of the supervision mechanism and accounting performance by regression analysis, thus the influence of corporate governance structure on agency costs. For the supervision mechanism and incentive mechanism between the substitution effect,there is less studied. The author first to incentives, supervision and agency cost of the related literature at home and abroad has made the induction and the summary, and then do to study the relevant basic theory analysis, further to the incentive, supervision, theoretical analysis of the substitution effect and then through the empirical validation. The authors use the Shanghai and shenzhen two city of 1673 in 2010-2012 data of listed companies, to study the supervision mechanism in corporate governance, leadership structure, the characteristics of the board of directors, board of directors and board of supervisors of shareholding) substitution effect of salary incentive mechanism, and then further studied the combination of the incentive and monitoring mechanisms influence on corporate performance, the agent cost reduction provides a new thought and method.The empirical results find that the size of the board of directors, leadership structure. And the size of the board of supervisors board ownership substitution effect on incentive mechanism. And although the independent directors proportion have played an important role in supervision, but not significant, indicating that China’s independent directors do not essentially independent, not to achieve the target of company set up independent directors mechanism. Then, paper and on the combination of the incentive mechanism and supervision mechanism on done empirically the influence of enterprise performance, the results show that using supervision mechanism and incentive mechanism, the substitution effect between the combination design of different governance, helps to reduce agency costs.Finally, according to the results of this research papers, the author puts forward the relevant policy recommendations. Further improving the system construction, along with our country adopts the combination of corporate governance mechanisms to reduce agency cost problem is the necessary way of each company.