Enterprise compensation incentive theory on principle-agent relation

Abstract

This paper makes an analysis of the enterprise compensation incentive theories and documents their own advantages and shortcomings. From the perspective of principle-agent relationship, it put forward the opinion that tournament theory and behavior theory are suitable used in the relation between shareholders and managers, while piece-rate theory and time-rate theory are mainly applied in relation between managers and the front-line workers. © Springer-Verlag Berlin Heidelberg 2013.