The Lnfluence Of Executive Monetary Compensation Incentives On Corporate Risk-taking

Corporate risk-taking reflects the risk tolerance that companies are willing to assume in order to pursue better market opportunities or high profits.After the outbreak of the financial crisis,the academic community has become more in-depth and incisive in the issue of corporate risk-taking.From a micro perspective,higher level of corporate risk-taking not only brings considerable financial returns,but also improves the company’s risk handling capabilities and long-term value in the future;from a macro perspective,companies are pivotal roles in the entire market economy,when our country’s market economy is in a period of important opportunities for transformation,increasing the level of corporate risk-bearing can accelerate the accumulation of social economic capital and the efficiency of technological innovation,and accelerate economic transformation.As far as the current research is concerned,external factors and the corporate own factors jointly affect the corporate risk-taking,but external factors such as market environment and policy systems are difficult to change in the short term.Therefore,the corporate own factors are an important entry point for increasing the corporate risk-taking.Studies have shown that the executives who own the decision-making power of the enterprise are risk-averse.A negative risk attitude will lead to a reduction in the level of risk-bearing of the enterprise,which will eventually lead to the loss of shareholders’ equity and the decline of enterprise value.Therefore,how to change the attitude of executives to face risks and motivate them to take on higher level of risk is a hot topic in the current academic circle.At present,there are a lot of researches on equity incentives.As the most common monetary compensation incentive for executives in the capital market,there is still room for research on whether it can effectively improve the level of corporate risk-taking.Therefore,from the perspective of executive monetary compensation incentives,this article has a certain practical significance to explore its impact on the level of corporate risk-taking.The research results not only provide theoretical supplements for the research on compensation incentives and corporate risk-taking,but also can be used to formulate more reasonable compensation.The incentive mechanism provides a reference to enhance the long-term value of the enterprise and accelerate the operation of the capital market.In addition,the healthy and long-term development of an enterprise is also inseparable from effective external and internal governance.Analysts,as an important external governance mechanism,have developed rapidly in recent years.They are able to dig deeper into corporate information,are more sensitive to management’s decision-making,and issue relevant research reports.The dual identity of information intermediary and external supervision is high in supervision and restraint.The opportunistic behavior of management provides a strong foundation.In addition,the ownership structure is an important part of internal governance,and the degree of ownership balance is an important component of the ownership structure.When the degree of ownership balance is high,it can balance the allocation power of decision-making and can play a supervisory role in the decision-making of senior management.Therefore,this article chooses to cut from these two angles to study whether the internal and external governance of the enterprise can affect the relationship between the executive monetary compensation incentives and the enterprise risk-taking.Based on the above background,this article analyzes the risk-taking,that is,the enterprise’s investment decision-making behavior,explores the effect of executive monetary compensation incentives on it,and incorporates analyst attention and equity checks and balances into the research framework.This article first introduces the research background and importance of the article,and secondly summarizes the factors and economic consequences of corporate risk-taking,the concept and economic consequences of executive monetary compensation incentives,and the impact of executive monetary compensation incentives on corporate risk exposure.Based on the relevant domestic and foreign literature,the research hypothesis is put forward with the support of the relevant theoretical foundation and influence mechanism.Finally,a fixed effects regression model was established,and the data listed on the Shanghai and Shenzhen Stock Exchanges and issues A shares on the trading market was used for empirical analysis to investigate the relationship between monetary compensation incentives for executives and corporate risk-taking.Aiming at the internal and external governance mechanisms,this paper studies the differences in the impact of executive monetary compensation incentives on corporate risk-taking under different analyst concerns and equity checks and balances.The research results show that monetary compensation incentives for executives have a significant inhibitory effect on the level of corporate risk-taking.When executives are motivated by monetary compensation,they are more aware of risk aversion,and their short-sighted behaviors are intensified.In the group where analysts pay more attention,there is a significant positive correlation between executive monetary compensation incentives and corporate risk-taking,while in the group where analysts pay less attention,there is a negative correlation.Because the increase in the number of tracking analysts increases the professionalism,information accuracy,and supervision of the team,when the number of analysts is insufficient,it increases the possibility of work slack,information distortion,and shielding executives.At the same time,in the group with a high degree of equity checks and balances,executive monetary compensation incentives promoted corporate risk-taking,while in the group with a low degree of equity checks and balances,the negative correlation between the two is not significant.Because the high degree of equity checks and balances means that the distribution of shareholders’ allocation rights is reasonable,mutual restraint makes the interests of shareholders consistent,and it plays an effective role in supervising the decision-making behavior of executives.The above conclusions can help Chinese companies adjust the salary incentive structure,formulate a more reasonable salary incentive system,and at the same time promote the development of financial market intermediaries in the capital market,encourage enterprises to improve their equity structure,form an effective internal and external governance mechanism,create a good investment environment,and protect enterprises Healthy and long-term development and efficient operation of the capital market.