Incentive Pay Plan and Dynamic Risk Control Mechanism——Evidence from Shanxi Piaohao
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| Title | Incentive Pay Plan and Dynamic Risk Control Mechanism——Evidence from Shanxi Piaohao
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| Author | Zhang Hu and Lan Rixu |
| Organization | The Central University of Finance and Economics |
| Email | jameshall@163.com；ganlenlan@163.com |
| Key Words | Shanxi Piaohao;Shengu;Incentive Pay; Endogenous Risk;Mechanism of Risk Control |
| Abstract | This paper analyzes the incentive pay plan of Shanxi Piaohao（山西票号） in the past and correspondent risks by a dynamic game model. We find that Shengu（身股） used to play an important role to improve agents’ performance. Moreover, Shengu and Yingu makes up provisions of risk, which turned out to fix the bilateral relations of principal and agents. Under such a mechanism, agents tended to pursue high- risk business because his protion in the provision became lower and lower. Based on the informal regulation of reputation and official implicit guarantee without proper risk control system, it would make the company collapse. |
| Serial Number | WP887 |
| Time | 2015-06-12 |
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