Managerial Cash Compensation, Government Control and Leverage Choice: Evidence from Chinese Listed Firms

DOI

10.2991/msetasse-16.2016.234How to use a DOI?

Keywords

managerial compensation, leverage choice, transition economy, government control, China.

Abstract

This paper investigates the relationship between managerial cash compensation and firm leverage decision for a sample of China's publicly listed firms during the period of 2003~2015. This paper employs simultaneous equation models to address the potential endogeneity caused by joint determination between managerial compensation and leverage. We find that cash compensation will motivate risk-taking behavior in capital structure decision of the firm. And ownership type will moderate the relationship between managerial cash compensation and capital structure. Management of government controlled firms will be less risk-taking on capital structure decisions although the same level of cash compensation is provided. Our results have significant implications for the design of compensation packages to achieve an appropriate risk-taking level of firm capital structure decision.

Copyright

© 2016, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Jia Wei Lu
AU  - Wen Qiang Chen
AU  - Sheng Hua Jia
PY  - 2016/11
DA  - 2016/11
TI  - Managerial Cash Compensation, Government Control and Leverage Choice: Evidence from Chinese Listed Firms
BT  - Proceedings of the 2016 4th International Conference on Management Science, Education Technology, Arts, Social Science and Economics (msetasse-16)
PB  - Atlantis Press
SP  - 1085
EP  - 1093
SN  - 2352-5398
UR  - https://doi.org/10.2991/msetasse-16.2016.234
DO  - 10.2991/msetasse-16.2016.234
ID  - Lu2016/11
ER  -