Executive Famine Experience And Corporate Debt Financing Costs

For a long time,debt financing is one of the more important financing channels for Chinese companies compared with equity financing.The cost of debt financing is not only directly related to the cost of corporate debt,but also reflects the difficulty of obtaining external debt financing within a certain period of time.Considering the importance and universality of debt financing,an in-depth study of debt financing costs undoubtedly has important theoretical and practical significance.As the most influential decision-maker in the company,the chairman has the highest decision-making power,which decides the management and operation of the company.Compared with other managers,the chairman has a stronger explanation of the company's policies.As the decision makers and executives of the company's business activities,how the company's executive characteristics affect its decision-making behavior has received extensive attention in the academic and practical circles.The research on the characteristics of executives has also been in existence for a long time.At present,the characteristics of executives in the literature Mainly involve gender,age,education,tenure,professional background,life experience,religious beliefs and other aspects.Especially in recent years,the early experience of executives has become a research hot spot,but most of the literature focuses on how the early experience of executives has affected corporate financing tendencies,and less on its impact on debt financing costs,especially early experience of famine.Whether the executives can reduce the cost of corporate debt financing,there is no literature to conduct an in-depth study.What is worth further inquiring is that,because the different life experiences of senior executives in the early stage may shape the abnormal behavior characteristics and living habits of senior executives,which may have different impacts on the company's production and operation decision-making,how does the early famine experience of senior executives affect the company's debt financing cost? In addition,will other background characteristics of executives affect the early famine experience of executives and the cost of corporate debt financing?In China's current transitional economic environment,besides its internal factors,the institutional environment also plays a profound role,because institutional conditions can change the profit and loss of a company's behavior,thereby affecting the company's motivation and decision-making.The behavior of enterprises is oftenendogenous to the institutional environment.It is a rational choice to adapt to the environment in a customized environment.Therefore,it is necessary to understand the various social and economic problems in China and not to analyze and explore the institutional environment in which the company is located.Among them,the 18 th National Congress of the Communist Party of China declared the implementation of the anti-corruption policy,which perfected the legal environment of our country,strengthened the external supervision of senior executives invisibly,and at the same time,the improvement of anti-corruption efforts also effectively improved the internal governance structure of the company,and strengthened the internal supervision of senior executives.Then,after the implementation of the anti-corruption policy,will it have an impact on the above relationship?In addition,the level of financial development in various regions of China is quite different,the financing constraints of the company will be significantly different,can the experience of senior management's famine ease the financing constraints of corporate debt financing costs in different financial environments?Finally,considering that monetary policy is one of the important means for the Chinese government to intervene and regulate the macro-economy,affecting the allocation of credit resources,can the experience of executive famine be used as a buffer to alleviate some of the pressure on the financing of enterprises?This paper takes China's A-share listed companies from 2001 to 2017 as the research object,and examines the impact of the early famine experience of the executives on the company's debt financing costs,and further tests the impact of these effects before and after the implementation of anti-corruption policies and financial development environments and in different stages of monetary policy relaxation and tightening.The results showed that:(1)compared with companies with no famine experience,executives have famine experience.The company's debt financing costs are significantly lower;and it controls other aspects of executives' characteristics,firm-level fixed effects,and endogenous problems.After that,the above conclusions are still valid;(2)compared with anti-corruption policies,areas with low financial development levels and loose monetary policy periods,the impact of executive famine experience on corporate debt financing costs after the implementation of anti-corruption policies,areas with higher financial development levels and currencies the period of policy tightening is more obvious;(3)by further exploring the mechanism of the impact of executive famine on the company's debt financing costs,it is foundthat the experience of executive famine helps to improve the company's internal control quality,reduce the company's earnings management,and improve the level of accounting conservatism,while executives the impact of the famine experience on corporate debt financing costs is more pronounced in companies with fewer analysts tracking and in companies audited by small accounting firms.This paper studies the impact of executive famine on corporate debt financing costs for the first time,which is of great significance to the in-depth understanding of China's business management and economic development issues;In theory,this paper expands the literature on the relationship between the cost of debt financing and the experience of executive famine;finds a new mechanism between the heterogeneity of executives and the cost of corporate debt financing,thus deepening the theory of high-level echelon;perfects the theoretical structure of debt financing costs,and points out new ideas for the related research of corporate financing costs.From a practical point of view,this study shows that creditors adjust their loan decisions according to the experience of executive famine.Therefore,this study has an important enlightenment on the signing of loan contracts between enterprises and banks,and helps creditors make scientific investment decisions.this study also found that the effect of executive famine experience reducing the cost of corporate debt financing through the unique perspective of internal control to play a value,which has important practical significance for the company to hire and inspect managers.