Executives’ Termination Risk, Monetary Compensation And Corporate Risk-taking

The global economy is in a state of downturn, and the 30 years’ fast development of China’s economy is slowing with the decreasing of the world economy. Nowadays, the market environment is getting increasingly complex and competitive. The Chinese enterprises are facing with the challenge of survival and development, their investment risk are also getting greater. Giving consider of the current economic situation and market environment, the Chinese enterprises’managers must break through the traditional mode of thinking, have an open and creative thing mind. They should have the courage to choose the right level of risk-taking and have the wisdom to control the probable investment risk at the same time. After the 2008 financial crisis, more and more foreign scholars pay their attentions on the corporation risk-taking.Under the governing structure of modern companies, executives’monetary compensation and force turnover both work as an effective method in corporate governance, and have been widely concerned. However, due to the confidentiality of the executives’ compensation contract and employment contract, the possibility of a direct measure of force turnover is very difficult, this limitations obstacles the research of existing literature. Then we use the 2000-2013 non-financial A-share listed companies as research samples, define the possibility of turnover owning to the poor business performance as the executives’ compulsive termination propensity, and measure the value according to the relative data. Further, we empirically investigate the impact of termination risk and monetary compensation on corporate risk-taking, and explore the interaction effect between them.We get the following research results:Firstly, the executive’s termination risk has a positive relation with the corporation risk-taking. Secondly, the improvement of monetary compensation could increase the company’s risk-taking. Finally, the roles of executives’ termination risk and monetary compensation are substitute in affecting corporation risk-taking. Based on the theoretical and empirical research, we put forward a series of policy recommendations:Improve the termination risk’s effect on executives; Take use of the positive effect of monetary compensation; Notice the substitution relationship between them and cut down the cost of corporate governance.