The Discussion Of Management Incentive Effect On The Capital Structure

In recent years, enterprise reform of our country enters a crucial stage and deep water areas, with continuous regulation of macro policy, financial markets and the increasing maturity of the concept of corporate governance gradually thorough popular feeling, to minimize the agency cost problem under the “two rights separation”, management incentive emerges gradually and gets more and more attention. As a scarce and effective social resource, the value of human capital, which is represented by management, is increasing with the perfection of the modern enterprise system, and its function is also highlighted. In order to avoid the loss of talents and the behavior of "alienation", how to use effective incentive measures to improve the enthusiasm of the enterprises management, appropriately constraint their behavior,andreduce the agency cost with the entrusted, has become the hot issue concerned by scholars.As an important part of corporate governance, management incentive is an important factor of the capital structure of the enterprise, and there are certain correlation between them, but study at home and abroad mostly focus on the correlation relationship between management incentive and corporate performance, though extended to the field of capital structure, the researchers are mostly confined to how the enterprise capital structure influencemanagement incentive. The research of how management incentive influences the enterprise capital structure is still not perfect.Based on the review of domestic and foreign literature on the correlation of management incentive and capital structure, this paper take principal agent theory as the core, and combine incomplete contract theory and incentive theory as the theoretical basis, and give full consideration to the agency cost between the principal and agent, take full account of the entrusted agency costs between humans and agents based on a panel data of China A-share listed companies from 2007 to 2013,this paper study the relationship between management incentives and capital structure of the company. We find that in terms of the management equity incentive,enterprise client take management incentive as an effective incentive means to control the agent, at the same time the agent has the management layer defense behavioral certain situations which will be influenced by the management incentive, and in turnadjust the capital structure to reduce its own human capital bankruptcy costs.And for the management compensation incentive,shareholderswill use capital structure to constrain the behavior of management layer, and management layer will use liability as prior commitment mechanismto the shareholders, taking the initiative to reduce the agency cost. So capital structure is not only the product of corporate governance and incentive mechanism, but also a part of these mechanisms.Therefore, this paper take management equity incentive and compensation incentive as a start point, making a detailed theoretical analysis on how management incentive influence corporate capital structure and putting forward relevant hypothesis, and then we use static panel data analysis method, selecting the empirical data of A-share listed companies in recent years as the analysis sample for empirical analysis, we analysis how management incentiveaffect the enterprise capital structure from both theory and empirical perspective, which will not only enrich related research results, but also provide a useful foundation for other scholars to similar studies and influence on capital structure and has important theoretical and practical significance on the research of capital structure.This paper will be divided into the following parts.First of all, we introduce the research background and significance, research ideas and methods of the research on the impact of management incentive on enterprise capital structure and the research frame.Then we make a detailed review and comment on how management equity incentive and salary incentive affect the capital structure respectively, extracting the theoretical basis useful for our research, and eventually decide the theoretical basis and research direction.What’s more, in well-defined concepts involved in this paper, the factors affecting the capital structure will be analyzed one by one. Based on the principal agency theory, incomplete contract theory and incentive theory, we make a detailed theoreticalanalysis on how management equity incentive and salary incentive affect the capital structure respectively and put forward relevant assumptions.The next part is the focus of this study, we select 2,433 A-share listed companies annual panel data from 2007 to 2013 and add industry dummy variables. Using the static panel data analysis method, we establish mixed regression model, fixed effect model and random effect model, and further according to the empirical results of the screening model, we finally verify the previously proposed hypotheses empirically and get reliable inspection conclusion. Meanwhile it makes a detailed analysis of the inspection conclusion, andmakes sure that the empirical conclusions are reliable and effective, Finally, on the basis of the empirical conclusions, the paper concludes the full text, and puts forward the policy suggestion of the A shares listing corporation capital structure and management incentive policy, then the contribution, shortage and Prospect of this research are explained.After the analysis, we find that managerial ownership incentive develops in rapidly in recent years. It has replaced management compensation and become one of the most important part of the management compensation, its applicable universality and practicability has changed. Meanwhile, after the establishment, selection and correction of the model, from the point of view of the Hausman test, LM Test, F test results, we are of the view that empirical testing of individual fixed effects model is the most suitable, and the regression equation about adjusted R2 are greater than 0.2,belonging to the acceptable range, the coefficient of management equity incentive variable substitution MEI2 and capital structure of variable substitution Lev correlation is-0.9334, T test significant at 10% level test, so the management equity incentive and capital structure shows an inverted U-shaped relationship, and there is managerial ownership "interval effect". The correlation coefficient of management incentive compensation variable substitution MS and the capital structure of the variable substitution Lev is 0.1056,T test significant at 10% level test, that is, management compensation and capital structure are positively related. By comparing the market value of the compensation incentive and equity incentive, we find that the incentive compensation degree is already far behind in equity incentive, thus we believe that salary incentive is no longer management incentive factors in the early study, but a gradually transition to hygiene factors. Therefore, both of them have verified the above hypothesis, and provided a basis for the related fields of the following research.