Shareholding structure, private benefit of control and incentive intensity: from the perspective of enterprise strategic behaviour

This paper studies theoretically and empirically the relationship among shareholding structure, the private benefit of control and incentive intensity. By integrating the principal-agent theory and the market competition theory into the three-stage dynamic game model, we built the dual principal-agent relationship including both 'shareholder-manager' and 'controlling shareholders-small and medium shareholders'. Empirically, the panel data of 1971 listed enterprises in China from the year 2007 to 2014 are analysed in order to justify the theoretical results by using two-way fixed effect model, dynamic panel model, and threshold regression model. It is shown that for enterprise managers, the higher their ability level and risk aversion, the stronger their incentive intensity will be. However, for shareholders, the private benefit of control and the incentive intensity show a non-linear relationship with the change of ownership concentration.