Study On The Influence Mechanism Of Bank Loans On Corporate Growth

In the development process of the company,the company not only needs executive incentives to encourage the executives to work harder and stimulate the innovative spirit of the executives,but also does not want the executives to adopt too aggressive operating style,which will put the enterprise in a greater risk,thus affecting the longterm development of the enterprise.In this paper,the sensitivity index vega value of the executive option value under the incentive of stock options is used as a measure of the degree of executives' risk taking.And this paper studies the influence of bank loans obtained by enterprises on the degree of executives' risk taking.On the one hand,it can help enterprises to obtain ways to constrain the degree of executives' risk taking,on the other hand,it can also study the transmission mechanism of corporate debt governance from a new perspective,which will provide new ideas for corporate governance.Based on the above two aspects,this paper proposes three main hypotheses: The increase of corporate bank borrowing will weaken the incentive for executives to take risks;The increase of incentive for executives to take risks will weaken the growth of the company;The incentive for executives to take risks is an intermediate variable of bank borrowing influencing the growth of companies.Based on the above conjecture,this paper is divided into three parts.Firstly,exploring the impact of corporate bank borrowing on the incentive of executives to take risks.Secondly,studying the impact of the incentive of executives to take risks on the growth of companies.Finally,testing the mediating effect of the incentive of executives to take risks.The first part of this article learns from Anthony Saunders and Keke Song(2018),applying the vega of option value as measures of executive risk-taking incentives.There are three advantages of this measurement.First of all,this index reflect the sustainability of executive incentives.Secondly,this index connect revenue of executive with company's stock performance.Thirdly,the index combines the internal governance of a company with the external performance of its executives.Compared with CEO pay or CFO compensation in existing literature,this index is more accurate.In this paper,it is concluded that bank borrowing has a significant negative impact on executives' risk-taking incentives.And when the company's borrowing structure is dominated by long-term borrowing,the executives' risk-taking incentives is greater than that of short-term borrowing,that is,short-term borrowing has a stronger weakening effect on executives' risk-taking incentives.At the same time,the paper concludes that the nature of the company,that is,whether it is a state-owned enterprise,has no significant influence on the overall influence mechanism.The second part of this paper studies the influence of executives' risk-taking incentives on the growth of companies.The comprehensive index is adopted to measure the growth of the company in this paper.Nine indicators affecting the company's profitability,operating ability,solvency and development ability are selected and the comprehensive index is obtained through principal component analysis.In this paper,it is found that the risk-taking incentive of executives has a significant negative impact on the growth of companies,and when the measurement index of the company's growth is changed to a single index,the coefficient of the risk-taking incentives of executives is still negative and significant,and the empirical results are robust.Finally,based on the significant negative impact of corporate bank borrowing on corporate executives' risk-taking incentives,and the significant negative impact of corporate executives' risk-taking incentives on corporate growth,this paper conducted a mediating effect test on whether executive risk-taking incentives are the mediating variable of corporate bank borrowing affecting corporate growth.The test results show that the risk taking of executives is an intermediary variable that bank loans affect the growth of companies,but it is not a complete intermediary variable.Although the overall impact of bank loans on the growth of the company is negative,bank loans have a positive impact on the growth of the company through the executives' risk-taking path.This paper finds out one of the transmission paths of bank loan to improve the growth of the company,namely,executives' risk-taking.