Author(s)

Haozhan Xu

Corresponding Author

Haozhan Xu

Abstract

This article takes Chinese A-share listed companies from 2007 to 2019 as the research object, and examines the relationship between executive option incentives and corporate debt default risk. The study found that option incentives can reduce corporate debt default risk; further research verified that the main influence channels of option incentives are “agent effect” and “wealth effect”, and these two effects are stronger in companies with larger-scale option incentives, higher agency costs, and higher welfare coefficients. This article enriches domestic research on option incentives and provides new ideas for companies to control debt default risks.

Keywords

Option incentive, Default risk, Risk-taking, Principal-agent