Corporate Governance and Contract Arrangement

This paper mainly discusses the governance issues from the contract arrangement perspective, which explores the relations among the agents´ residual claim parameters, effort variables, incentive variables, effort cost variable and incentive cost variable etc. through the design of the incentive contracts. We make the following conclusions: 1) The incentive contracts have contingent characteristics; 2) Monitoring efficiency is important to design the incentive contracts; 3) The principal must pay attention to the residual itself; 4) The agents´ risk-neutral can´t always promise to attain the best outcome of the incentive contracts; 5) The principals´ first mover advantage is an important factor to achieve the efficiency optimization of the incentive contract