Analysis Of Executive Incentive Mechanism In Listed Family Enterprises

Family-owned enterprises have become an important part of the Chinese economy,playing an ever-increasing role in stimulating economic development and providing employment.The agency mechanism means that family-owned enterprises have to a varying degree,some principal-agent relationship.This mechanism encourages professional managers to put their own strength to best use in promoting the long-term development of family businesses.The “rational economic man” is found in every professional manager.For this reason,the economic goals of the owners and operators are often inconsistent due to the existence of the “rational economic man”.It is at this point that the necessity arises for an incentive mechanism to narrow the gap due to such inconsistency.In today's hot real estate market,real estate enterprises are relatively large in scale,running quite some projects.Hence,the effects of inconsistency in economic goals get amplified,resulting in greater economic losses.Similarly,the real estate enterprises stand to incur greater losses too.In family businesses of real estate,however,due to the limitations of traditional notions,the incentive method is still largely in the form of salary incentives,without really considering other needs of managers.There is a lack of some comparatively perfect incentive mechanism,making it difficult to deliver desired incentive effects.With Country Garden as an example,this paper,built on the analysis of the incentive mechanism and effect of this family enterprise and drawing on the executive incentive mechanism and related theoretical bases,defines the effect of family business executive incentive and attempts to establish a senior executive incentive effect evaluation system.Based on the defined effect of executive incentive and the initial evaluation system of executive incentive,this paper gives a general analysis of the overall incentive effect of the listed real estate family enterprises.Meanwhile,in light of the characteristics of family enterprises of the real estate industry,the influencing factors of the executive compensation,and the influencing factors of executive incentive of family enterprises,this paper sums up major problems of the executive incentive of listed real estate family enterprises in China and puts forward suggestions for improvement.This paper consists of seven chapters.The first chapter is the introduction,focusing on the background,significance,methods,and ideas of the research as well as main contents of this paper.The second chapter is about literature review,which studies the relevant literature on the incentive effect of executives and provides theoretical guidance for this study.The third chapter concerns the theoretical analysis.This chapter defines the concepts of executives and executive incentive,and discusses such basic theories as incentive and principal-agent.The characteristics of executive incentive and part of the situation of the real estate industry are also covered.The fourth chapter analyzes the current situation of the executive incentive mechanism of listed family enterprises.The fifth chapter is devoted to the basic situation of Country Garden's incentive mechanism.Chapter six evaluates the effect of Country Garden's two incentive plans and gives an analysis at both vertical and horizontal levels.This chapter also examines the shortcomings of Country Garden's executive incentive mechanism.Chapter seven is the conclusion and prospects.From the analysis of the case of Country Garden,some executive incentive problems are identified that are common to listed real estate family enterprises.This chapter puts forth some suggestions and measures for addressing these problems.The limits of this paper and the problems calling for further analysis are also included in the sixth chapter.The study described in this paper affords real estate family enterprises some valuable guidance and ideas which may assist in enhancing their executive incentive mechanism,thus expanding the application depth and breadth of the incentive mechanism in the real estate industry.This paper may be found useful and of some reference value to those trying to build up the value of human capital,put human capital to best use,and enhance the effect of executive incentive mechanism in a real estate enterprise.