Executive Compensation and Corporate Debt Policy and Monitoring

DOI

10.2991/aebmr.k.200908.013How to use a DOI?

Keywords

executive compensation, leverage, risk taking behavior

Abstract

Both debtor monitoring and corporate risk-taking are very interested to researchers, but how does these two come together and interplay in terms of executive compensation contract structuring? This paper intends to shed light on this question in the following dimensions. First, we have documented that firms with high leverage (Risk) grant executives with low Vega sensitivity, because bondholder have disincentive to taking risk beyond necessary, and the respective firms are likely to put constrains on executive risk-taking behavior through compensation contract. Furthermore, the results show that such effective monitoring could be accomplished by greater usage of short-term lending and hence requiring firm to roll-over the debt period by period. Lastly, this result is robust weakly to all top five executives, and robust strongly throughout the accounting standard transition period.

Copyright

© 2020, 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  - Dongxu Yang
AU  - Tian Tan
AU  - Shizhong Xiong
PY  - 2020
DA  - 2020/09/08
TI  - Executive Compensation and Corporate Debt Policy and Monitoring
BT  - Proceedings of the 3rd International Conference on Economy, Management and Entrepreneurship (ICOEME 2020)
PB  - Atlantis Press
SP  - 79
EP  - 84
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.200908.013
DO  - 10.2991/aebmr.k.200908.013
ID  - Yang2020
ER  -