Executive’s compensation and firm’s risk-taking in China

Abstract

This thesis empirically examines the impact of executives’ payment on firm’s risk-taking and the difference between state-owned companies and non-state-owned companies on risk-taking in China, using 9061 firm-year observations of Shanghai and Shenzhen Stock Exchange listed companies from 2006-2016. All the data are collected from China Stock Market & Accounting Research (CSMAR) Database. The results indicate that there is a positive relationship between executives’ compensation and firm’s leverage ratio but a negative relationship between executives’ compensation and firm’s R&D expense. In addition, there are significant difference between state-owned companies and non-state-owned companies on risk-taking; state-owned companies have higher leverage and invest more in R&D.