Empirical Analysis On Financial Distress Of Chinese Listed Companies Based On Managerial Incentives

Managerial incentives are set up to realize the consistency of the interests betweensenior managers and shareholders, which can reduce agency costs and improve operationalefficiency. The relationship between managerial incentives and companies’ performancehas been the research hotspot home and abroad. The financial distress of listed companiesis related to multi-stakeholders. The schoars’ research to the financial distress of listedcompanies mainly focuses on the view of financial indices with less about the influence ofcorporate governance. As a key factor of corporate governance, our research will combinethe managerial incentives and the financial distress of listed companies to explore thenon-financial factors which influence listed companies falling distress.Base on the incentive theory, the relationship between managerial incentives andcompanies’ performance is set forth from the view of improving the companies’performance. Theoretic hypothesis is proposed; the listed companies that were firstspecially treated from the year2001to2010and their matched companies in our countryare chosen as the research objects; the data of the3-year and1-year before specially treatedare collected; and the Logistic regression is used to test the influence of managerialincentives on the probability of listed companies falling distress. The research resultsshow that, in the year of t-3to t-1, managerial ownership is non-significantly negativelyrelated to the probability of listed companies falling distress, at the same time, in the yeart-3managerial compensation is non-significantly negative-related to the probability oflisted companies falling distress, but in the year t-2and t-1, there is significantly negativerelationship between them. And through the curve regression, significantly quadraticrelationship between managerial compensation and the financial distress was found.