A Research on Financial Monitoring Capability Boundary of Manager Contract

With the method of economic mathematics, the thesis studies the financial monitoring capability boundary of manager contract. It advances that the determination of incentive payment coefficient can be regarded as the quantization standard that financial monitoring subject implements financial monitoring capacity. As financial monitoring contract is a suboptimal contract, the internal design can be deduced from the traditional incentive payment coefficient equation determination. Meanwhile, it researches the allocation of manager financial monitoring power under the incentive payment coefficient. It believes that the controlling part should allocate more monitoring power to the controlled part when the monitoring efficiency is high, since the controlled part will raise its self-discipline probability on its behalf. On the contrary, the controlling part will concentrate more financial monitoring power in itself. And the research proves the importance of self-discipline mechanism of the financial monitoring object.