Empirical Research On Executive Compensation,Risk-Taking And Corporate Financial Performance

The separation of ownership and management rights is a prominent feature of modern corporate system,which makes the management concept closely related to the success or failure of the corporations.Based on the dual influence of the internal and external environment,when faced with high-risk projects with many uncertain factors,executives will choose to avoid risks in order to safeguard their own interests,thus damaging the interests of shareholders.In recent years,the sky-high salaries of senior executives have also attracted the attention of all sectors of society.Therefore,how to design a reasonable and effective executive compensation incentive mechanism,maintain a good principal-agent relationship,solve the problem of management avoiding risks,and make the interests of executives and corporations converge is the significance of this study.On the basis of summarizing relevant literatures at home and abroad,this paper selects the data of 359 listed companies in Shanghai and Shenzhen stock markets from 2013 to 2017 as research samples,takes principal-agent theory as research starting point,combines incentive theory,puts forward research assumptions,selects relevant research variables,and conducts empirical analysis on the relationship between executive compensation,risk-taking and corporate financial performance by constructing multiple regression models.Finally,according to the research conclusion of this article,some countermeasures and suggestions are put forward.The results show that:(1)there is a significant positive correlation between executive monetary compensation and equity compensation on risk-taking;(2)Executive monetary compensation and equity compensation have significant positive correlation with corporate financial performance;(3)There is a significant positive correlation between risk-taking and corporate financial performance;(4)Risk-taking is an intermediary variable of the influence of executive compensation on the corporate financial performance.The specific performance is: salary incentive can stimulate the enthusiasm of executive work,make executives willing to choose high-risk items in business decisions,thus improving the level of corporate risk-taking,increasing the opportunities for corporations to obtain high returns,and ultimately improving the corporate financial performance,forming a functional path of "executive compensation-risk-taking-corporate financial performance".