An Empirical Analysis on the Relation between Executive Compensations and Financing Decisions

摘要

This paper examines the incentive effects of executive compensations on the influences of financing decisions. This study discusses the managerial financing decision under the risk-taking. The result finds that holding executive stock options makes managers change their financing decisions and has effects on the debt ratio and the market leverage. Under the risk-taking, the results also find that the managers issue equity to substitute for debt in the short-term. More importantly, the findings support the managerial risk-taking hypothesis, and are contrary to managerial risk-aversion hypothesis.