Research On The Effect Of Executive Equity Incentives On The Risk Of Stock Price Crash

High quality development of real economy cannot do without the power of capital market.However,Chinese capital market was set up late,the relevant supervision mechanism is not perfect,and the information environment is poor.Although the relevant institutions have implemented many measures to improve the market environment,stock crashes of listed companies have occurred frequently in recent years,which has exerted a bad influence on the capital market.Therefore,understanding the formation mechanism of stock price crash risk can help our economy to develop towards a high quality direction.Stock price crash risk does not refer to the market level of the market,but also refers to the negative skew of listed companies’ stock price yield.Previous studies on stock price crash risk mainly discussed its generation mechanism.At present,the "information hiding hypothesis" is the most accepted explanation for its generation mechanism,that is,company executives will selectively disclose information based on self-interest.When the accumulation of negative information exceeds the "cellar cost" that executives are willing to pay for it,the negative information will be released into the market.In a short period of time,the company’s stock price caused a negative impact,damaging the interests of shareholders.It can be seen that senior executives played a key role in the stock price crash.Then,as an equity incentive system to ease proxy conflicts between shareholders and executives,how does it affect the risk of stock price crash? How do executives from different backgrounds fare?Based on the above problems,the fundamental purpose of this thesis is to study the correlation between equity incentive of senior executives and stock price crash risk,as well as the influence of background characteristics of senior executives on the relationship between them,from the perspective of high-quality development of enterprises,under the background of strong support from the state,economic transformation and deepening reform of financial mechanism.This thesis combines the principal-agent theory,"information hiding hypothesis" theory and high-level echelon theory,takes A-share main board listed companies in Shanghai and Shenzhen as samples,selects relevant index data from 2009 to 2021,and manually collates the Party membership data of general managers of listed companies to empirically test the relationship between equity incentive of senior executives and the risk of future stock price collapse of enterprises.And the influence of party membership,overseas background characteristics and financial background characteristics of senior executives on the relationship between them.The results show that:(1)The stock price crash risk of companies listed on the A-share main market of Shanghai and Shenzhen will be positively affected by the equity incentive of senior executives.(2)The Party membership of general manager will weaken the positive effect of equity incentive on stock price crash risk.(3)The overseas background of senior executives will weaken the positive impact of executive equity incentive on the stock price crash risk.(4)The financial background of senior executives will enhance the positive impact of executive equity incentive on the risk of stock price crash.This thesis has enriched the relevant research on executive equity incentive and stock price crash risk,further expanded the boundary conditions of the impact of executive equity incentive on stock price crash risk,provided empirical evidence for the theoretical application of background characteristics such as executive party membership in the capital market,and contributed some enlightenment for enterprises to design executive compensation structure.