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