Research On Executive Compensation Incentive And Dynamic Adjustment Of Capital Structure

Capital structure decision is critical in corporate's financial decisions.The discussion of capital structure in theory and empirical aspects is the hotspot in financial management and financial research.Different financing methods affect the company's capital cost and the value.In addition,the change of capital structure means the change of equity and debt ratio and power of shareholders and creditors.Therefore,whether the capital structure of the company is suitable is not only related to the future value of the company,but also related to the allocation of social resources.Since Miller and Modigliani put forward the MM theory in 1958,the study of static capital structure has been quite perfect.In recent years,scholars have begun to study the dynamic capital structure,the dynamic adjustment of capital structure and the degree of deviation of capital structure has become a hot spot in this field.Previous scholars focused on how the internal corporate characteristics and external macroeconomic environment affect the dynamic adjustment of capital structure,but ignored the executive's role in the process.Executives as the ultimate implementer of capital structure decisions,their will and ability of adjusting directly determine the adjustment process.How to give executives appropriate incentives to promote the company's capital structure optimization adjustment is worthy to study.Based on the above background,this thesis takes the data of the A-share listed companies in Shenzhen and Shanghai from 2006 to 2016 as the samples.First,this thesis tests the relationship between executive compensation incentive and adjustment speed and the degree of deviation of capital structure.Then,this thesis tests the impact of property rights on the relationship between the executive compensation incentive and dynamic adjustment of capital structure.The study of this thesis includes the following six parts:The first part is the introduction.This part mainly introduces the background and the theoretical significance and practical value of this thesis,and briefly introduces research methods,research purpose,the research frame and the innovation of this thesis.The second part is literature review.Based on the topic of the article,this part mainly reviews the influencing factors of capital structure dynamic adjustment and how executive compensation incentive influences capital structure in related literatures,and on the basis of the literature are reviewed.The third part is the theoretical basis and the hypothesis.This part first defines the basic concept,and puts forward the theoretical basis of this study,including dynamic trade-off theory of capital structure,principal-agent theory,optimal salary contract theory and human capital theory.Finally,this part analyzes the mechanism of action about relevant theories and proposes hypothesis.The fourth part is the research design.This part mainly chooses the research samples and data according to the assumptions in the above,and establishes the research model and research variables.The fifth part is the empirical test and the result analysis.First of all,by the actual capital structure to the factors of target capital structure regression to acquire the company's target capital structure.Based on above,this thesis carry out descriptive statistics,correlation analysis,regression analysis and robustness test.The sixth part is the conclusion and suggestion.Based on the theoretical analysis and empirical test,this part summarizes the conclusion and puts forward the feasible suggestion,and points out the shortcomings and further research direction.According to the results of empirical research,the executive's total compensation is significantly positively correlated with the adjustment speed,and significant negative correlation with the degree of deviation.This indicates that increasing the overall level of executive compensation can speed up the capital structure adjustment and reduce the deviation degree.After further distinguishing the different types of executive compensation,this thesis discovers that the level of monetary compensation and the level of equity pay are significantly positively correlated with the adjustment speed,and significant negative correlation with the degree of deviation.This indicates that increasing the executive's monetary compensation or equity pay can increase the adjustment speed,and reduce the degree of deviation of capital structure.After adding the property rights factors,this thesis finds that the effect of executive compensation incentive and adjustment speed of capital structure in private enterprises is greater than state-owned enterprises.The effect of executive compensation incentive and degree of deviation of capital structure is also greater than state-owned enterprises.Innovation of this thesis is the unique research perspective and deepening research content.Based on the dynamic trade-off theory,this thesis explores how the executive compensation incentive influences the adjustment speed and the degree of deviation of the capital structure,and the specific manifestation of this effect.On the basis of considering the influence of compensation type,this thesis explores the influence of different compensation types to the dynamic adjustment of capital structure.This thesis further explores property rights how affects the relationship between executive compensation incentive and dynamic adjustment of capital structure.