Research on Executive Incentive and Financial Risk

Abstract

This paper selects the data of A-share listed companies from 2013 to 2017 as a research sample, and explores the relationship between executive incentives, equity concentration and financial risk through empirical analysis. The study found that the relationship between compensation incentives and financial risks is a non-linear positive U-shape, and equity incentives and financial risks are linearly negatively correlated. The research contribution is mainly based on the industry-wide research sample to deeply explore the true impact of executive incentives on financial risks. The conclusion is more universal; it provides reference for enterprises to reduce financial risks and optimize capital structure from the perspective of internal governance.