An Empirical Research On The Effect Of Division Managers' Motivation On Group Financial Performance

Diversification has developed the main trend of enterprise,double-sided agent relationship induces opportunistic behaviors,which deeply affect the performance of enterprise groups.In large groups,ICM effectively replaces ECM and furthermore reduces information asymmetry through division manager contracts so as to improve financial performance.This dissertation uses game theory and optimal programming method to construct the mathematical model,describing the relationship between group financial performance,incentive of division managers and ICM.Moreover,it enriches model with the strong and weak divisions.In the case of asymmetric information,the optimal division manager incentive combination includes monetary,equity and capital incentive.This dissertation further puts forward hypotheses and adopts the sub-Layer linear model(HLM)to analyze the relationship between divisions' manager incentive and group financial performance on the basis of non-financial companies listed in Shanghai and Shenzhen Stock Exchange.The results show that "payment-performance contract" had already been fulfilled.There are notable positive correlations between cash between monetary,capital incentives and financial performance,but equity incentive is not the same.In the diversified enterprises,the higher the rate of return in division,the lower the capital incentive provided by headquarters through ICM.What's more,the ICM efficiency can obviously enhance the positive relationship between division manager incentive and group ROE.However,diversification of enterprises plays the absolutely opposite role.Compared to state-owned group,the private group division manager incentive for the Group ROE is more efficient.