Research On The Impact Of Executive Incentives On Corporate Risk Taking

Risk taking is a word introduced from abroad,which has attracted extensive attention of scholars in recent years.Risk taking is simply the behavior of a company to take risks,that is,the decisions made by the company in the face of uncertain results.The decision of the company is decided by the senior management.The final decision of the management will have a great impact on the company.The management will integrate many factors to maximize its own and the company's interests.Based on the principal-agent theory,incentive theory,human capital theory,the executives' human capital is closely related to the enterprise benefit,executives in order to maximize their own interests,to ensure the stability of the work in the business decisions often are at Iow risk of bias towards investment project,high-risk high-yield,low risk project brings to the enterprise's profit is limited,so executives choose low risk projects also means giving up a lot of profit opportunities.Therefore,the research on risk taking plays a vital role in the future development of enterprises.Equity incentive was implemented earlier in western countries and is now more extensive.In China it came later.The introduction of the company law,the securities law and other laws has removed the legal obstacles to the implementation of equity incentive.Equity incentives;often referred to as the "golden handcuffs" of managers,have grown considerably in China.This paper selects 300 Shanghai and shenzhen listed companies as the research object,and systematically and comprehensively studies the relationship between executives' monetary compensation and corporate risk taking,as well as the relationship between management equity incentive and corporate risk taking.The results show that:1.There is a significant negative correlation between executives' monetary compensation and risk taking.2.The empirical results of management equity incentive and risk taking have not been tested.In this paper,the executive compensation incentive and risk bearing level in our country,the more fully combed the executives monetary compensation incentive and risk bearing,equity incentive and enterprise risk exposures,the results enrich and expand the executive compensation incentive and company risk bearing of the related research,as the compensation contract design and corporate governance of listed companies to provide feasible countermeasures and Suggestions.