Control of the Largest Shareholder,Identity and Incentive Pay

Identity between major shareholders and managers in firms is the managers' unique incentive method. To put identity and only One Dominant Shareholder into managers' incentive improves the principle-agent model. This paper describes the optimal incentive and discusses the relationship between manages' identity and incentive pay under three conditions. Moreover,it analyzes the relationship of managers' identity,incentive pay and the value of the firm,and the relationship of shareholding proportion of major shareholders,managers' incentive mechanism and the value of the firm.