Research on Incentives of the Company to the Management

Yizhe Wang ()
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Yizhe Wang: Salem state University

A chapter in Proceedings of the 2022 4th International Conference on Economic Management and Cultural Industry (ICEMCI 2022), 2023, pp 464-470 from Springer

Abstract: Abstract The separation of ownership and management rights of the company requires the owner of the company to hire a manager with professional ability to manage the company. The managers of the company pursue the maximization of their own interests, while the owners of the company pursue the maximization of profits. Therefore, company owners need to link the managers of the company's profits in different ways. That is, the owners use different incentive methods to change the goal of the managers to pursue the maximization of their own interests in the maximization of the company's profits, so as to meet the goals of both the managers and shareholders. This study aims to improve the loyalty, enthusiasm, and profitability of managers by using different incentive methods, and analyzing the way companies motivate managers through qualitative analysis and review. In general, the company will not change the manager easily, because the change of the manager requires a vote of the board of directors. The company cannot change the manager without reason, and forcible dismissal would violate the articles of association. The replacement of the new manager will cause the company to enter a long-term adaptation period, and the future performance of the company is still unknown. Therefore, companies need to adopt different means to motivate managers. When managers use different incentive methods, the company's profit may change accordingly. When the company's profit grows the fastest, this incentive method is the best choice.

Keywords: Ownership; Management rights; Incentive (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-098-5_52

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DOI: 10.2991/978-94-6463-098-5_52

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