Research On The Impact Of Executive Divorce On Corporate Risk-taking

In recent years,the "astronomically expensive" divorce cases of executives of listed companies have been frequent,which have been highly concerned by the public under the exposure of the media.It is also a hot issue that the academia and the industry pay close attention to.What influence the divorce of executives will bring to the listed company is a topic of common concern to the outside world and the company itself.Previous studies on the impact of executive divorce on companies in China focused on the economic consequences of corporate financial performance,stock market reaction and other aspects,but did not include the change of corporate risk-taking level in the research scope.Most of the studies only carry out qualitative analysis,while the choice of empirical method is relatively simple in the quantitative analysis,and the event study method is mostly used to explore the short-term impact of executive divorce on market reaction.After the divorce,the personal property and shares of senior executives decrease sharply and they become more risk averse,which may aggravate agency conflicts and affect the investment plan and financial strategy of the company,and the risk preference of the company will also change accordingly.Based on executive company description and analysis on the related changes before and after the divorce,using 2011 to 2019,the data of a-share listed companies in our country,studying the effect of executive divorce risk exposure to the company,through the multiple regression method to explore the influence of the relationship between,and then to executives shareholding proportion and the discretion of the monetary compensation of executives as A group,To explore the role of the two main mechanisms of executive incentives in the relationship between executive divorce and the negative effects of corporate risk taking,and to conduct a robust test on the empirical results.The main conclusions are as follows :(1)Executive divorce of listed companies in China will have a negative impact on the company.In the sample of companies with divorced executives,the average proportion of equity split after divorce was 31.93%,about 40% of the executives’ positions would change after divorce,and 25%of the executives resigned their original positions within one year after divorce.In a family business,the split of shares between husband and wife will weaken the family’s control over the company,and external forces will take advantage of the void and threaten the control of the company.(2)Executive divorce has a significant negative correlation with corporate risk-taking,that is,executive divorce will reduce the level of corporate risk-taking.From the perspective of individual executives,the change of marital relationship will have an impact on personal risk preference.When personal wealth is reduced,risk aversion will intensify,which will affect managers’ choice of corporate investment strategy and financial plan.From the perspective of listed companies,executive divorce breaks the original social network,destroys the company’s inherent customer resources,information channels and other social capital,reduces ownership concentration and corporate performance,increases the difficulty of financing,and reduces the company’s risk bearing ability.(3)Equity incentive enhances the negative effect of executive divorce on risk-taking.The higher the shareholding ratio of executives,the stronger the effect of executive divorce on reducing corporate risk taking.(4)Monetary compensation incentive weakens the negative effect of executive divorce on risk-taking.When executive monetary compensation is high,the negative relationship between executive divorce and risk taking is not significant;When the monetary compensation of executives is low,the negative relationship between executive divorce and risk taking is significant.