Research On The Impact Of Equity Incentive And Equity Structure On Corporate Risk Taking

The principal-agent problem between the owner and the manager caused by the separation of the two powers in modern enterprises has always been a hot topic in academic research.As a long-term incentive mechanism,equity incentives are considered to be one of the effective ways to alleviate the problem of principal-agent,and become more and more mainstream in modern corporate governance.At present,domestic scholars’ research on equity incentives mostly focuses on the impact of equity incentives on company performance,while the research on risk-taking is limited,and the research conclusions are different.In the context of increasingly fierce competition in the capital market and the changing economic environment,modern enterprises are faced with various uncertainties and operational risks.Shareholders can diversify their investment risks through portfolio theory,and thus they are “risk-neutral”,while managers are often “risk-averse” for their own interests.The difference in risk preference between shareholders and managers is one of the performances of the principal-agent problem.Can the equity incentive mechanism encourage managers to take more risks on their own initiative? As part of corporate governance,does the shareholding structure affect the effect of equity incentives on risk taking?This paper takes the Shanghai-Shenzhen A-share listed company that implemented the equity incentive in 2006-2017 as a sample,and constructs the multiple linear regression model to draw the following conclusions:(1)The greater the intensity of equity incentives,the higher the risk-taking level of the company;(2)Both stock options and restricted stocks can promote the company’s risk-taking level;however,compared with stock options,restricted stocks have better incentive effect for corporate risk-taking;(3)Compared with state-controlled listed companies,the incentive effect of equity incentives in non-state-controlled listed companies is more effective for the company’s risk-taking;(4)There are differences in the effect of equity incentives under different equity concentration levels.When equity is relatively dispersed and relatively concentrated,the intensity of equity incentives is significantly positively correlated with the level of risk exposure of the company;when equity is highly concentrated,there is a negative correlation between the equity incentive intensity and the company’s risk exposure,but it is not significant;(5)Among the state-controlled listed companies,the control of the major shareholder does not promote the incentive effect of the equity incentive intensity on the company’s risk-taking,and the “supervisory effect” of the major shareholder is not reflected;and among the non-state-controlled listed companies,Shareholder control will weaken the incentive effect of equity incentive intensity on the company’s risk-taking,which is reflected in the “conflict effect”.This paper comprehensively combs the theoretical and empirical research results of equity incentives and corporate risk-taking,and enriches and expands relevant research,which provides reference for the implementation of equity incentives and reform of state-owned enterprises in China.