A Study On How Heterogeneous Debts Affect Firm Risk-taking

Under the increasing market competition background, how companies survey and develop in a competitive environment through company risk-taking have been concerned for a long time. As a corporate stakeholder how creditors affect the company’s risk-taking behavior is the focus of this article.From the sight of creditor governance we mainly focus on nonlinear relation between heterogeneity debts and firm risk-taking behavior, then we research how stake affect the result of nonlinear relation. To achieve this purpose firstly, we analyze the relationship between debts and firm risk-taking based on the definition of heterogeneous theoretically, secondly we use corporate earnings volatility to measure firm risk and establish non-linear econometric model to research how debts affect risk-taking and interaction between debts and stake. Finally we performed robustness tests to ensure the stability of our result.The main conclusions in this paper are as follows:there exist a U-shaped relation between firm debts and risk-taking,, when the stake is low firm debts can perform a better effect on risk-taking behavior. Heterogeneity debt also perform different effect on risk-taking, compared to exchange-traded debt the relational debt have a better Influence on firm risk-taking, the firm stake can affect the effect of U-shaped relation.