The Impact Of Executive Compensation On The Dynamic Adjustment Of Capital Structure

The theory of capital structure is an important basis and component of the theoretical system of corporate financial capital structure adjustment.It is also regarded as one of the most basic and hot research fields of capital structure adjustment.It provides a strong driving force for the future development direction of Chinese companies,including helping enterprise managers to determine the appropriate source of long-term financing and its scale and directly determine their long-term investment decisions.As the balance between the financing source cost and long-term investment income is widely used to determine the capital structure of enterprises,it has a positive impact on the growth of enterprise value.The research in the field of corporate finance often considers the balance of interests between shareholders and executives as the same,and the conflict of interests between them is a fundamental problem that cannot be avoided.Morellec(2004)the principal-agent cost research mainly into the entrusted agency cost theory and the core of the two main control theory,the enterprise managers the freedom to asset disposition and agency cost control mechanism of enterprise assets,enterprise capital structure and enterprise value of the asset prices directly affect the relationship between included in dynamic analysis,built a directly reflects the conflicts of interest between managers and corporate shareholders principal-agent model.At present,few scholars at home and abroad have studied the adjustment effect of actual capital structure to target capital structure to solve the problem of current enterprise capital structure adjustment.At present,our country is still in a rapid transition of the market economy,due to the complexity of China's economy is the external macro economic environment and the double impact of internal operation and management of the environment,the actual capital structure may be gradually deviate from the target capital structure of enterprise,how to design and perfect the corresponding mechanism,makes the management of enterprises will be able to more actively adjusted by the actual capital structure at its best,is worthy of our extensive and in-depth research.Taking Shanghai and Shenzhen A-share enterprises from 2006 to 2018 as the main analysis samples,this paper firstly deeply analyzes the correlation between executive compensation incentive and the adjustment speed and deviation degree of corporate capital structure.Thirdly,the paper further studies the relationship between executive compensation incentive affected by financing constraints and capital structure adjustment.Finally,the paper analyzes the differential influence of executive compensation on the upward and downward adjustment of capital structure.Sys-gmm estimation method was used for regression analysis.Enterprise management level of monetary compensation incentive and equity pay incentive levels in the current our country present stage enterprise salary incentive system,and occupies the important status in the enterprise capital structure,and has a strong appeal for executives at present stage,therefore,the executive's current level of monetary compensation and equity compensation level is higher,its ability to adjust the company's capital structure and also the higher the initiative.Enterprises with weaker financing constraints have wider external financing channels and easier access to external financing.Therefore,the speed of capital structure adjustment is more sensitive to executive compensation,which will directly encourage their executives to actively carry out capital structure adjustment.Then,this paper verifies the existence of asymmetry in China's capital structure adjustment.Enterprises whose capital structure is lower than the target structure have a faster adjustment speed than those whose capital structure is higher than the target structure.Management salary has a greater positive effect on enterprises' upward adjustment of capital structure.Finally,this paper based on the empirical analysis conclusion,to the enterprise executive compensation and the compensation incentive mechanism for the overall design,and give Suggestions on optimizing the incentive mechanism of executive compensation.In addition,China should further improve the laws and regulations on equity incentive,reduce the possibility of senior executives seeking personal gains by taking advantage of their own rights,and make the equity compensation incentive system of enterprises play a better role in equity incentive effect.At the same time,so as to fully use to the incentive and guiding role of executive compensation in capital structure adjustment,enterprises should better combine the equity incentive and compensation incentive,improve the overall design of their compensation,and finally effectively promote the realization and improvement of their long-term strategic value.When the external financing environment is difficult,enterprises should adjust their financing strategies and actively expand financing channels.When the external financing environment is more optimistic,the possibility of obtaining financing will be enhanced.At this time,enterprises should actively optimize the capital structure with the goal of realizing value maximization.The distortion of dynamic adjustment of capital structure can be alleviated through executive compensation so as to optimize dynamic adjustment of capital structure.