 We know that in any corporate firm, the ownership of assets is differentiated from their controlling. This differentiation of ownership of assets by the shareholders from controlling of these assets by the firm's manager creates agency relationship between the shareholders and the managers. Now the managers are assumed to be best in utilizing the resources in the best interest of the shareholders and to incentivize these managers for their managerial actions. The firm needs to have appropriately and effective and efficient incentive design but this incentive design should based on some sharing and that sharing may be in terms of profit. This means that managers may be allowed to share firms profit along with the shareholders. In this profit sharing, there may be a problem means that in order to maximize firms profit so that the management can reap a higher amount of share in the firm's profit but the profit maximization may be at the cost of over utilization of the firm's assets. As a result, the value of these assets may go down. This means the profit maximization may on the other end decrease the market value of the assets. We see that there is a conflict between profit maximization and the assets value enhancement. While designing an incentive design system, there may appear three different questions. First, how pay should be linked with the managerial performance and the shareholders objectives? We know that by a shareholders objective, we means the maximization of market value of the shares they hold. The second question is that how compensation can be distributed among the managers in a case when managers frequently change their jobs. Three, how incentive design be effective and efficient between line and staff employees or between different layers of management like top level management, middle level management and frontline managers. A question arises why to maximize shareholders value? This means is it necessary to organize resources in a corporate firm and to give limited liability to the shareholders with the assignment of residual claims to them? Why not to have an Athenian society where people are given voting rights to the policies and decision making? Why not to have an autocracy format styled corporate firm where an individual is given the whole power to formulate policies and exercise decision making power? Or why not to have a socialist firm where every participant is given equal right to participate in the policy making and decision making process and to share the resulting produce on equal basis? A broader answer to all these questions is that shareholders are in a better position to design contracts with all the stakeholders. In this position, shareholders can design these contracts at lesser cost than the cost borne by the individual stakeholders. In doing so, the shareholders can maximize their value, but how shareholders can do these all things because we see that shareholders are required to satisfy all the claims of the other stakeholders before the residual goes to the shareholders. In doing so, shareholders are assumed to bear all the risks associated with the stakeholders and as a result, they are required to have a residual claim on the assets of the firm. Shareholders are in a better position to diversify company-specific risk through diversified market portfolio and even selling their own shares in the market. In this way, they can transfer the risk of ownership from one individual to another individual to the open market operations. During residual claimant, shareholders are better in efficient risk management and risk sharing among all. An important thing is that the decision rights of the shareholders are aligned with the rights of the other stakeholders in ahead of the residual claims of the shareholders. This means that before claiming their rights, shareholders have to satisfy the rights of the other stakeholders. In sport of residual claims of the shareholders, Jensen has given four reasons. The first is that writing many risk sharing contracts by individual stakeholders becomes costly in everyday risk-changing environment and limited liability of the firm allows its shareholders to bear company risk at lesser cost than the cost borne by the other stakeholders. The third is that transferable residual claims allow ownership to be separated from controls. This means that shareholders are in a better position to hire the managers who are equipped with the firm-specific or industry-specific skills at an appropriate level of compensation. Decision making skills despite of the residual claims held by the shareholders lies with the management. This means that although the shareholders have residual claim on the assets of the firm, but the decision making rests with the management of the firm. In literature, there is an allegation that the greater profit accrued to the shareholders of a firm at the cost of labor's payoff, people say that shareholders can raise their profits through the laying of the firm's labor. But we see that the empirical literature have sufficient evidence that in a firm in the longer run, who is best and efficient management firm experienced effective production shareholder value creation and the worthy employment opportunities. We have also some empirical evidence on residual claims of the shareholders in the sense that a firm with the shareholders having both residual claims and controlling the firm's assets can better align economic interest of all the shareholders and the stakeholders in line together.