The Impact Of Major Customer Executive Compensation Differences On Corporate Risk-taking

In recent years,with the increasing concern about the relationship between risk management and corporate value,corporate risk-taking has naturally become one of the hot topics in academic and practical research.The relationship between salary differences and corporate risk-taking The literature on research is also very numerous.Summarizing the previous research data,we can find that these documents are more focused on the impact of the high level of corporate executive compensation on the risk-taking level of the company.However,there is very little literature on the impact of customer executive compensation differences on the level of corporate risk tolerance from the perspective of supply chain.In order to make up for this shortcoming,this paper studies the impact of major customer executive compensation differences on corporate risk exposure.There is a close economic relationship between companies and customers in the supply chain.Each company has a certain number of customers,but many of them rely on a few major customers for sales revenue and cash flow.Therefore,major customer performance,governance mechanisms and other aspects have a significant impact on the company’s expected cash flow,solvency,corporate valuation,investment risk preferences and risk-taking levels.Executive compensation is an important part of the governance mechanism.Executives stand at the top of the decision pyramid and play an important role in the company’s value or the increase in shareholder wealth.Balancing corporate governance and executive compensation incentives helps companies Rapid development.The level of major customer governance will affect the level of risk-taking of enterprises,because the worse the level of corporate governance of major customers,the greater the company’s operational risk and financial risk,the more unstable the performance and cash flow,and ultimately the upstream enterprises.Sales revenues and expected cash flows are affected,and the instability of capital flows inhibits the enthusiasm of companies investing in high-risk projects,and the level of risk-taking is declining.This paper selected companies listed during the period 1992-2014 from Copmustat,CRSPandISSR as research samples,and selected 87,541 companies.The panelanalysis method was used to analyze and analyze the sample data,and a systematic and comprehensive analysis of the transmission mechanism of “supervisor compensation difference—company governance—enterprise risk commitment”was carried out.Through empirical research,it is found that the salary difference of major customers is negatively related to the risk exposure of the enterprise.The corporate governance level of the main customers is positively correlated with the risk exposure of the enterprise,which is consistent with the expectation,indicating the “supervisor salary difference” from the perspective of the supply chain.The transmission mechanism of corporate governance-enterprise risk-taking is effective,which means that the good compensation system of major customers and the improvement of corporate governance mechanism have a positive impact on controlling the level of corporate risk-taking.At the same time,this paper further studies the impact of major customer compensation differences on corporate risk exposure under financing constraints.Under the effect of large salary differences and strong financing constraints,the risk-taking level of enterprises declines.