Summary: | 碩士 === 國立中興大學 === 會計學系 === 87 === With the prosperity of multinational corporation(MNC), it''s a popular way for the enterprise to internationalize to increase it''s competitive advantage. However it also creates serious agency problem. This study investigates how the board of directors designs the optimal contract and operates the monitoring mechanism to induce the foreign subdivision''s manager to work hard and thus increase both parties'' expected utility.
This study applies the model developed by Radner(1985) to design MNC''s optimal contract and derive equilibrium under various conditions. Under asymmetric information, the board of directors may try to construct the monitoring mechanism to prevent the manager''s suboptimal behavior. Besides how the board of directors uses the mechanism and how the manager reacts will both be affected by some variables like the manager''s controllability to the environment and adaptability to foreign culture, and if the board of directors considers the manager''s passing reviewing as meaningful information. The main results are:
1. In one-period, finite-period and general infinite-period games, the equilibrium is not pareto efficient. While infinite-period games with review strategies, the equilibrium might be pareto efficient under some conditions.
2. The professional manager is willing to work hard if the board of directors can operate the monitoring mechanism with low cost, or execute serious punishment, or set very accurate performance standards.
3. The board of directors should consider the manager''s passing reviewing as important information in deciding how to operate the monitoring mechanism, and both the board of directors and professional manager''s expected utility can be improved.
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