Research On The Influence Of Executive Incentive On Debt Maturity Structure

An increasing number of enterprises have formed a state where ownership and management rights are separated,as modern corporate governance is widely established in China.In order to unite senior executives and shareholders' interests,designing executive incentive schemes has become a consensus.However,shareholders implement executive incentive will affect interests of creditors and influence their credit decisions.One of the main consequences is that creditors will adjust debt maturity,affecting the debt maturity structure of the corporation.Debt maturity structure,as an important part of capital structure,has important effects on the capital cost,debt repayment,manager interests and agency cost.Therefore,this paper studies the impact of executive incentives on corporate debt maturity structure taking creditor expectations into consideration.Firstly,this paper reviews relevant research literatures at home and abroad on the incentive effect of executive motivation,the influence of explicit executive motivation on debt maturity structure and perquisite consumption.It is found that domestic and foreign scholars come to different conclusions about the influence of explicit incentives on the debt maturity structure.And few scholars consider the influence of implicit incentive of perquisite consumption on the debt maturity structure.Moreover,the literatures for further research from the perspective of property right are also relatively insufficient.Secondly,this paper defines concepts of "senior manager","senior executive incentive" and "debt maturity structure”,and puts forward hypotheses of this paper by using principal-agent theory,information asymmetry theory,agency cost of debt theory,incentive theory and contract theory.In this paper,a total of 10911 samples of listed companies in Shanghai and Shenzhen Stock Exchange from 2014 to 2018 are taken as research objects to empirically test the impact of executive motivation on debt maturity structure,dividing executive incentive into executive compensation incentive,executive equity incentive and executive perquisite consumption.And influences of executive incentives on debt maturity structure under different property rights are analysed.The results show that executive compensation incentive and executive perquisite consumption are positively correlated with debt maturity structure,while executive equity incentive is negatively related with debt maturity structure.Compared with state-owned enterprises,executive compensation incentive of private enterprises has fewer positive impacts on debt maturity structure,whereas executive perquisite consumption of private enterprises has greater positive impacts on debt maturity structure.And equity incentive of private enterprises has more negative impacts on debt maturity structure.Finally,recommendations are provided according to research results including enterprises reasonably designing executive incentive contracts,creditors incorporate executive incentive into companies' credit assessment criteria,and authorities improving laws and regulations to protect creditors interests and fully utilise executive incentive effects.