Executive Incentive,Risk Perception And Zero-leverage Firms

The dissertation aims to study how executive incentive and risk perception affect the zero-leverage behavior of listed firms.The capital structure theory believes that appropriate leverage ratio is beneficial for improvement of corporate value.In recent years,however,the phenomenon of low-leverage or even zero-leverage has emerged as a growing trend of internationalization which is called "zero leverage puzzle".Current literature has pay attention to the zero-leverage puzzle,which is attributed to financial constraint,financial flexibility,corporate governance and macro environment based on capital structure theories.However,both current theories and literature cannot give a rational explanation for why the phenomenon of zero-leverage exists.Therefore,the dissertation discusses the zero-leverage behavior of listed firms from the aspects of executive incentive and risk perception.Based on the analysis of institutional background of the supply and demand of capital,banking is still the main channel of the corporate external financing in China.There has being some gradual reform in terms of interest rate,business,product and so on.Banking confront with increasing capital competition and more intensive customer battle.Moreover,listed companies are always excellent enterprises because of rigorous market admission mechanism and the guidance of professional organizations.And listing qualification of companies can bring other financial services besides banking to banks,and reduce the banks' risk lending to post-IPO companies,which can improve the borrowers' ability to gain loan.The dissertation tends to believe that the institutional background in Chinese capital market makes it possible for listed firms to choose zero-leverage proactively.The executives of companies which own decision-making rights play a crucial role in the zero-leverage behavior of listed firms,and the incentive and risk perception of executives are the reasons why listed firms choose zero-leverage proactively.Based on expectancy theory and loss aversion theory,the dissertation discusses the determinants of zero-leverage behavior of listed firms,which including equity incentive and liquidity risk perception in non-SOEs,promotion incentive and related risk perception in SOEs.Moreover,the relationship above is affected by the change of macro environment,such as monetary policy,anti-corruption case and the implementation of pay ceiling order.The dissertation also discusses the consequences of zero-leverage behavior.The main findings are as follows.Both insufficient incentive and high risk perception are important determinants of zero-leverage behavior.And the relationship above is affected by monetary policy,anti-corruption case and the implementation of pay ceiling order.The dissertation takes robustness tests through changing variables,samples,regression methods and so on.The results are robust.In addition,zero-leverage behavior of listed companies is a persistent phenomenon in China.The choice and persistence of zero-leverage can affect the investment efficiency and firm performance,and the relationship above changs with the marketization of the regions.The dissertation will help to understand the mystery of zero-leverage and low-leverage,and rethink current capital structure theories.