| In the modern corporate environment characterized by the separation of ownership and control,the principal-agent problem caused by the interaction of shareholders,creditors and managers has always been the focus of corporate governance research.When the financial crisis broke out in 2008,many large companies went bankrupt because they could not deal with the crisis effectively.At the same time,the phenomenon of "sky-high compensation" of senior management frequently occurred,and the problem of compensation disorder was undoubtedly exposed.The issue of skyhigh executive pay raised public concern,and then-President Barack Obama proposed a pay cap.In 2010,the relevant regulatory authorities in China issued the Guidelines on The Supervision of Sound Compensation in Commercial Banks.One of the core measures of these laws is the introduction of inside debt,a new financial instrument,which links executive compensation incentives with the capital structure of the company and the level of risk-taking.That is to say,through the development of scientific and reasonable compensation incentive mechanism to reduce agency conflict,promote the stable operation of the company.This paper mainly analyzes the impact of inside debt incentive on corporate capital structure.By constructing a continuous time mathematical model framework,this paper introduces the inside debt into the executive compensation contract,analyzes the corporate value and gives the explicit solution of the corporate security value and equity value.Then,numerical simulation is carried out to analyze the role of inside debt in the decision-making mechanism of the company,what kind of impact on the capital structure of the company and get the optimal proportion of inside debt.The numerical results show that:first of all,when the basic parameters are set,the optimal ratio of inside debt is calculated to be 0.35 according to the principle of corporate value maximization,and there is an optimal leverage ratio corresponding to it.Secondly,the incentive of inside debt in managers’ compensation can increase the value of corporate bonds and reduce bond credit spreads,leading to more conservative management decisions.Finally,an appropriate proportion of inside debt can help balance the interests of external shareholders and creditors,and to some extent motivate managers to choose a better capital structure,so that the company will develop in the direction of value maximization.Further,on the basis of theoretical analysis,this paper selects the data of 117 listed financial companies from The CSMAR database of listed companies from 2016 to 2020 as samples to empirically test the correlation between inside debt and financial leverage ratio.The results show that,in the sample of companies with high leverage ratio,inside debt is negatively correlated with asset-liability ratio.Verify the conclusion that inside debt makes managers more conservative in theoretical analysis.Based on the results of theoretical analysis,this paper correctly understands the impact of debt compensation incentive on managers’ behavior.The company should give full consideration to the optimal capital structure and pay attention to the role of managers’ behavior in corporate governance while constantly improving the compensation mechanism.Through analysis,it is found that the appropriate proportion of inside debt makes managers more conservative,alleviates the agency conflict between shareholders and creditors,and improves the soundness of corporate operation.Domestic theoretical research on inside debt the issue of literature are scarce,only empirical research is limited to the banking industry.From the theoretical point of view,inside debt are extended from the state-owned banking sector to the general listed companies and from the empirical point of view to the listed financial companies.This innovation improves the universality of inside debt and is also an innovation of compensation tools in corporate governance. |
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