Abstract: This paper introduces an important characteristic of the enterprises under the stock-cooperation system, i.e. the internalization of the principal, which means the employees of the enterprise are both principals and agents at the same time. This point is taken into the principal-agent analysis of the enterprises with a simple model. The results show that under this system, although the allotment of shares of an enterprise has an important effect on employees' enthusiasm, it can't solve the employees' free-rider problem well and some incentive measures which are effective in other enterprises are probably no longer effective in this case.