金融paper代寫范文：Executives Inside Debt on Risk Management and Investment Decisions
本文是金融專業(yè)的paper范例，題目是“Executives Inside Debt on Risk Management and Investment Decisions（高管內(nèi)部債務(wù)的風(fēng)險(xiǎn)管理和投資決策）”，本文的目的是研究負(fù)債內(nèi)部高管(CEO和CFO)之間的關(guān)系，以套期保值為風(fēng)險(xiǎn)管理代表，研發(fā)支出為投資決策代表。在過去的文獻(xiàn)中，有限的研究被用來理解內(nèi)部債務(wù)對(duì)企業(yè)風(fēng)險(xiǎn)管理和企業(yè)投資策略的影響。由于內(nèi)部債務(wù)數(shù)據(jù)的可用性，2006 - 2016年美國行業(yè)樣本從2006年開始，將其帶入固定效應(yīng)面板回歸模型，我預(yù)計(jì)會(huì)發(fā)現(xiàn)，內(nèi)部債務(wù)高于股權(quán)薪酬除以債務(wù)權(quán)益比的首席執(zhí)行官和首席財(cái)務(wù)官更有可能使用衍生品進(jìn)行對(duì)沖，但在研發(fā)方面的投資更少。
其背后的原因是，由于CEO和CFO都是債券持有人，債務(wù)內(nèi)部的高管可以降低與債權(quán)人之間的代理成本。然而，這種內(nèi)部債務(wù)導(dǎo)致高管更傾向于規(guī)避風(fēng)險(xiǎn)和保守，以減少風(fēng)險(xiǎn)，避免在研發(fā)等高風(fēng)險(xiǎn)項(xiàng)目中承擔(dān)風(fēng)險(xiǎn)，這可能會(huì)為企業(yè)帶來長期盈利。我將擴(kuò)展我的研究，檢查并期望發(fā)現(xiàn)CFO和CEO內(nèi)部債務(wù)對(duì)公司決策的影響不同。此外，不同類型的內(nèi)部債務(wù)取決于其性質(zhì)，如養(yǎng)老金和遞延薪酬或有擔(dān)保和無擔(dān)保的影響不同。
Abstract摘要
The aim of this paper is to study the relationship between executives inside debt (CEO and CFO) with hedging as representative for risk management and R&D expenditure as representative for investment decision. Limited studies in past literature has been conducted to understand the inside debt effect to firm risk management and firm investing strategy. The sample of US industries from 2006 to 2016 due to availability of inside debt data start from 2006, bring this into fixed effect panel regression model, I expect to find that CEO and CFO with higher inside debt over equity compensation divided by debt to equity ratio are more likely to hedge with derivatives but invest less in research and development(R&D). The reason behind this is this executive inside debt could reduce agency cost between to debtholder, as CEO and CFO being one of the debtholders. However, this inside debt results in this executive being more risk averse and conservative to mitigate risk and avoid taking risk in high risk project such as R&D which could potentially lead to long term profitability for firm. I will extend my study to check and expect to find that CFO and CEO inside debt effect the firm decision differently. Also, different type of inside debt depend on its nature such as pension and deferred compensation or secured and unsecured would effect the result differently.
Introduction
When managers involve in risky activities that benefit shareholders but exploit from debt holders at their expense, the agency conflict of interest arises between managers and debtholders.
Jensen and Meckling (1976) showed that there will be an optimal combination of similar to equity nature and similar to debt nature compensations to solve conflict of interest within the firm.
Incentive of management level has large implication toward a firm’s risk management and investing decisions. To reduce the conflicts of interest among counterparties (managers and shareholders), previous paper has studied the effect of using firm’s equity as the compensations such as providing stocks and stock options (Coles, Daniel, & Naveen, 2006; Amstrong, Gow, & Larcker, 2013).
管理層激勵(lì)對(duì)企業(yè)的風(fēng)險(xiǎn)管理和投資決策具有重要意義。為了減少交易對(duì)手(經(jīng)理和股東)之間的利益沖突，之前的dissertation研究了使用公司股權(quán)作為補(bǔ)償?shù)男Ч缣峁┕善焙凸善逼跈?quán)(Coles, Daniel， & Naveen, 2006;Amstrong, Gow， & Larcker, 2013)。
An executive compensation generally consists of base salary, yearly bonus, provided stocks, stock options, deferred compensations and pensions fund (Han and Pan, 2016). Inside debt is the benefit that postpone receiving to the future after retiring from firms which consists of deferred compensations and pensions and it becomes broadly available in compensation for top management. This reimbursement signifies as unreceived and unsecured debt that firms has obligation to executives, inferring these top executives to the risk of default in the same way with what confronted by debtholder from outside (Edmans and Liu, 2011; Sundaram and Yermack, 2007).
Extensive theoretical literatures research on top management compensation role and the suggestion of these researches originates the conflict of interests between principle and agent that could explains from agency cost theory. In the corporation, agent problems happen from different in objective of principle such as shareholders and debtholders and agent such as managements. According to this, executive compensations are considered to mitigate the agency cost existing because of misbehave such as management personal interest.
大量的理dissertation獻(xiàn)對(duì)高管薪酬作用進(jìn)行了研究，這些研究的建議源于委托人與代理人之間的利益沖突，可以從代理成本理論中加以解釋。在公司中，代理問題的產(chǎn)生是由于股東、債權(quán)人等主體與管理層等代理人的原則目標(biāo)不同而產(chǎn)生的。據(jù)此認(rèn)為，高管薪酬是為了減輕因管理層個(gè)人利益等不當(dāng)行為而存在的代理成本。
Previous researches on executive compensation mostly pay attention to base on equity compensation that primarily focus on using provided stock and stock option. Lately, the study of Sundaram and Yermack (2007) start to investigate CEO debt-based compensation (Inside debt) role and up until now stream of literatures in this area is still small but continue to grow deeper and wider.
The executive debt-like compensation states as the inside debt that is frequently used to include CEO incentives within debtholders characteristic. Childs, Mauer, and Ott (2005) propose that the overinvestment possibly will potentially shift wealth from debtholder to equity holders.
Both regulators and academics gain more attention to Chief Financial Officers (CFO) roles in firm as their roles being more important and came with high responsibility. Over the recent of decades CFOs have turned out to be main role and crucial in corporate decision making such future strategic plan and risk management. In the paper, I will test how different CEO and CFO inside debt incentive relate to firm value in term of firm hedging and R&D decision. Level of different in both position inside debt could affect corporate action differently. I expected that executive who hold higher inside debt tend to make decision that likely to use derivative tool in higher level for hedging as they turn out to be more risk averse from their payable roles. On the other hand, they will invest less in R&D which the result is in long term profitability and seem to be high risk decision, even it can possibly create extreme positive wealth and cash flow for the firm. Other conflict of interest may arise.
隨著首席財(cái)務(wù)官(CFO)在企業(yè)中扮演的角色越來越重要，承擔(dān)的責(zé)任也越來越高，監(jiān)管機(jī)構(gòu)和學(xué)術(shù)界對(duì)CFO的關(guān)注也越來越多。近幾十年來，首席財(cái)務(wù)官在企業(yè)決策、未來戰(zhàn)略規(guī)劃和風(fēng)險(xiǎn)管理方面發(fā)揮了重要作用。在本文中，我將測試不同的CEO和CFO內(nèi)部債務(wù)激勵(lì)與公司價(jià)值的關(guān)系，從公司對(duì)沖和研發(fā)決策。兩者內(nèi)部債務(wù)水平的不同可能會(huì)對(duì)公司行為產(chǎn)生不同的影響。我預(yù)期持有較高內(nèi)部債務(wù)的高管往往會(huì)做出可能使用較高水平衍生工具進(jìn)行對(duì)沖的決定，因?yàn)樗麄儗?duì)自己的可支付角色更傾向于規(guī)避風(fēng)險(xiǎn)。另一方面，他們會(huì)減少對(duì)研發(fā)的投資，結(jié)果是長期盈利，似乎是高風(fēng)險(xiǎn)的決策，甚至可能為公司創(chuàng)造極端正的財(cái)富和現(xiàn)金流。可能產(chǎn)生其他利益沖突。
Research question
The main research question that this paper will address is whether CFO and CEO inside debt related to risk management (hedging decision) and investment decision (R&D)
Motivation動(dòng)機(jī)
Motivation for this paper is very few literatures examine the debt role in executive compensation. In previous papers on compensation for executive primarily pay attention on the usage of cash and equity in order to maximize value of shareholder. Also, based on my knowledge, even in the topic of inside debt for executive, the studies are very limited. In this paper, I will study whether CEO and CFO inside debt relate to the misbehave of strategic decisions in firm. According to this, it could avoid the prosperity shift from debtholders to equity holders.
本文的動(dòng)機(jī)是很少有文獻(xiàn)研究債務(wù)在高管薪酬中的作用。在以往的高管薪酬研究中，主要關(guān)注的是為了實(shí)現(xiàn)股東價(jià)值最大化而對(duì)現(xiàn)金和股權(quán)的使用。而且，根據(jù)我的了解，即使在高管內(nèi)部債務(wù)的話題上，研究也非常有限。在本文中，我將研究CEO和CFO內(nèi)部債務(wù)是否與公司戰(zhàn)略決策的不當(dāng)行為有關(guān)。據(jù)此，它可以避免繁榮從債券持有人向股票持有人轉(zhuǎn)移。
Therefore, I expect that my paper could fill in the gap in the papers by examining the relationship between CEO inside debt and risk management test with hedging decision and investment decision measured by R&D investment decision.
Literature and contribution文學(xué)和貢獻(xiàn)
Literature emphasis on the compensation for executive that come with nature of debt which is called “Inside debt” is very new topic in finance. Jensen and Meckling(1976) claim that agency cost could be potential mitigate by inside debt. This inside debt is obligation liability to executive management to hold a slice of the debt within firm, so as manager motivation to transfer the wealth between debtholder and shareholder will reduce.
文獻(xiàn)強(qiáng)調(diào)了伴隨債務(wù)性質(zhì)而來的高管薪酬問題，被稱為“內(nèi)部債務(wù)”，是金融學(xué)的一個(gè)新課題。Jensen和Meckling(1976)認(rèn)為代理成本可以通過內(nèi)部債務(wù)潛在地減輕。這種內(nèi)部債務(wù)是企業(yè)管理層持有公司部分債務(wù)的義務(wù)責(zé)任，因此管理者在債權(quán)人和股東之間轉(zhuǎn)移財(cái)富的動(dòng)機(jī)將減少。
Edmans and Liu (2011) demonstrate that inside debt is could solve agency issue better when compare with salary and bonus since debt-like compensation is sensitive to likelihood of default and the liquidation cost.
Sundaram and Yermack (2007) suggest that to reduce chance debt to default, managers with great pension holdings seem to be more conservative in management.
As more papers and literature on inside debt have been conduct, to my understanding, no study been published on investigate relationship of executive inside debt both CEO compare with CFO together in one paper as most literature focus on mostly CEO and either one of them. Hoyt and Lee (1999) found that rather than CEOs, most risk managers direct service to CFOs. When CFO is main person involved in financial decision, I would expect that CFO of higher inside debt has more motivation to make decision in risk averse ways. This paper will examine how these two executives (CEO and CFO) act differently in these making decision such as they are potentially more likely to use derivatives instrument to hedge.
隨著越來越多的關(guān)于內(nèi)部債務(wù)的dissertation和文獻(xiàn)的開展，據(jù)我所知，沒有研究發(fā)表在一篇dissertation中同時(shí)比較CEO和CFO的內(nèi)部債務(wù)關(guān)系，因?yàn)榇蠖鄶?shù)的文獻(xiàn)主要關(guān)注CEO和他們中的任何一個(gè)。Hoyt和Lee(1999)發(fā)現(xiàn)，大多數(shù)風(fēng)險(xiǎn)經(jīng)理直接為cfo服務(wù)，而不是ceo。當(dāng)首席財(cái)務(wù)官是財(cái)務(wù)決策的主要參與者時(shí)，我認(rèn)為內(nèi)部負(fù)債較高的首席財(cái)務(wù)官更有動(dòng)機(jī)以風(fēng)險(xiǎn)厭惡的方式進(jìn)行決策。本文將研究這兩位高管(CEO和CFO)在這些決策中如何采取不同的行為，比如他們更有可能使用衍生品工具進(jìn)行對(duì)沖。
This proposed paper should contribute to previous papers in following ways. First, this will create novel vision regarding inside debt topic which is part of executive compensations which has gain limited attention and scarce study while most research focus on equity holding components.
This paper will contribute to the agency cost theory which will be the beginning of this paper’s hypothesis development. Importantly, high level executive inside debt holdings persuade CEO to behave as representative for both counterparties (shareholder and debtholder).
My study could provide evidence that this component of executive compensation “inside debt” could affect to firm performance and value maximization significantly though the activities such as level of hedging and investing decision. Although there are growing number of paper on CEO inside debt, previous papers mostly study on relation of CEO inside debt and performance of a firm (Wei and Yermack, 2011). Moreover, due to availability of the data, the reliability of executive compensation number report is limited which result in reliability of the result.
Hypothesis Development假設(shè)開發(fā)
According to the research question and prior literature reviews supports the idea that executive compensation inside debt tend to make more value-destroying decision. I expect that CEO inside debt and CFO inside debt with relate to higher risk management level but underinvesting decision as they will being more conservative and risk averse. Also, these two position CEO and CFO will act differently. Given this, the main hypotheses are as follows:
根據(jù)研究問題和之前的文獻(xiàn)綜述支持的觀點(diǎn)，高管薪酬內(nèi)部債務(wù)傾向于做出更多的價(jià)值破壞決策。我預(yù)計(jì)負(fù)債的首席執(zhí)行官和負(fù)債的首席財(cái)務(wù)官與更高的風(fēng)險(xiǎn)管理水平有關(guān)，但投資決策不足，因?yàn)樗麄儗⒏颖Ｊ睾蛥拹猴L(fēng)險(xiǎn)。此外，這兩個(gè)職位的CEO和CFO的行為也會(huì)有所不同。基于此，主要假設(shè)如下:
HA: CFOs and CEO with higher level of inside debt holdings tend to use to hedge risks more.
HB: CFOs and CEO with higher level of inside debt holdings likely to invest in R&D less.
Above hypotheses are under assumption that CFO and CEO with higher inside debt holding positively correlate with higher hedging level but negatively correlate with R&D investment
To extent the study, another test will be conduct under assumption that both executive (CFO and CEO) will act differently toward the firm differently according to their knowledge and experience.
HC: CFO are more risk averse than CFO as they have more knowledge of financial result of company.
Data and Sample Selection數(shù)據(jù)和樣本選擇
Main data in my paper include U.S. S&P1000 Firms for the period 2006-2016. Our first data for sample starts from 2006 because numbers of deferred compensation and pension available just from this year onward. This is the result from the Securities exchange commission (SEC) had announced that they put requirement for firm to disclose executive compensation in proxy statements, this rule solved to unavailable data issue on this topic area. I obtained data from Wharton on Computstat for executive compensation database (Annual Compensation Table), hedging data, R&D expenditure data and other necessary financial data information.
我dissertation中的主要數(shù)據(jù)包括2006-2016年期間的美國S&P1000公司。我們的第一批樣本數(shù)據(jù)是從2006年開始的，因?yàn)檫f延薪酬和養(yǎng)老金的數(shù)量僅從今年開始。這是由于美國證券交易委員會(huì)(SEC)宣布要求公司在委托書中披露高管薪酬，這一規(guī)定解決了該主題領(lǐng)域數(shù)據(jù)不可用的問題。我從沃頓的Computstat上獲取了高管薪酬數(shù)據(jù)庫(Annual compensation Table)、套期保值數(shù)據(jù)、研發(fā)支出數(shù)據(jù)等必要的財(cái)務(wù)數(shù)據(jù)信息。
To cleaned data, I will remove firm with no derivatives instrument hedging, low R&D industry or no inside debt record.
For hedging level, I obtain data on derivative instrument usage from 2006 to 2016. I will collect how many times the firms use derivatives tool for hedging such as look for the words Interest rate swap (IRS), Cross currency swap (CCS), Commodity hedging, and other exotic derivative hedging product. This will show the likelihood and percentage of hedging.
Empirical Method
I will use balanced panel of sample S&P1000 companies in US period between 2006 and 2016. I will conduct fixed-effects panel regression model to test the hypotheses:
Hedging leveli,t=αi,t+β1CFO/CEO inside debti,t +∑βjControli,t+ εi,t. [1]
RD expensei,t=αi,t+β1CFO/CEO inside debti,t +∑βjControli,t+ εi,t. [2]
There is an advantage of using panel structure data analysis on fixed-effects panel regression model. This will provide benefit of analysis when data consist of both cross-sectional and time series mixed. I will mitigate extreme values the influence of extreme value in the same way as other previous research by winsorized all variables at the 1% and 99%. Statistically significant will derive by using robust standard errors technique.
Control variable控制變量
There are some control variables that I will enters into equation in order to remove their effects from the regression analysis. These factors are found to be highly associated with Hedging level and R&D expenditure.
我將在方程中加入一些控制變量，以便從回歸分析中去除它們的影響。這些因素與套期保值水平和研發(fā)支出高度相關(guān)。
First, leverage has many effects toward investment decision of firm in future. Jensen and Meckling (1976) suggest that firm investing strategy might adjust according to risk of leverage and debt in firm. Furthermore, in order to reduce the default risk, debtholders prefer company to invest in less risky investment. Singh and Faircloth (2005) showed that high level of leverage is the cause that effect lower R&D expenditure. I will use ratio of debt that consist of current liabilities and long term debt and divided by equity (share multiplied share price) to represent the leverage.
Next, I will control for tax which will also have multidimension effect to the dependent variables. There is the different in taxation when compare high level of R&D company with low level of R&D company. When comparing firm age, younger firm tend to make investment in R&D at high level but in contrast, firm with lower R&D expenditure tend to be more mature (Scholes and Wolfson, 1990). Tax implication and firms tax status will have an effect R&D decision. Therefore, I will control for tax in this study.
接下來，我將控制稅收，這也將對(duì)因變量有多維度的影響。高水平研發(fā)企業(yè)與低水平研發(fā)企業(yè)在稅收上存在差異。當(dāng)比較企業(yè)年齡時(shí)，較年輕的企業(yè)傾向于在高水平上進(jìn)行研發(fā)投資，而研發(fā)支出較低的企業(yè)則傾向于更加成熟(Scholes and Wolfson, 1990)。稅收含義和企業(yè)稅收狀況對(duì)研發(fā)決策有影響。因此，在本次研究中，我將對(duì)稅收進(jìn)行控制。
There are other control variables that could consider regarding the effect to firm risk management and investing decision. I will control liquidity constraint, firm size (total asset), firm age (number of years) or firm growth (firm market value/firm book value) which controlling for all of these above could lead to improve the result in regression panel analysis.
Univariate Analysis
Comparing the mean and median: In this univariate analysis test, I will check the mean and the median difference of each variables: dependent, independent and control variables. First, I will compare between high hedging level firm and Low hedging level firm and then I will compare high level of R&D company and low level of R&D company. It is expected that the mean and the median of executive inside debt of higher hedging level firm will be higher and the inside debt should be lower for lower R&D firm.
Multivariate Analysis
By looking at the fixed effect regressions panel from the nominated testing model which will provide the table for both independent and control variables and come up with the main result to check the following effect:
Note: testing at 5% and 10% significant level and conclude the result to check the consistency with proposed hypothesis.
Additional analysis and robustness tests額外的分析和穩(wěn)健性測試
In general, CFO has main responsibility for firm’s finance including financial planning, risk management, reporting and analysis which CFO will directly report to CEO who is the top executive in the firm. However, as these two executives are play most important roles in company and to extent to the past literature, another test will be conduct under assumption that both executive (CFO and CEO) will act differently toward the firm differently according to their knowledge and experience. It is expected that CFO are more risk averse than CEO as they have more knowledge of financial result of company.
一般來說，CFO主要負(fù)責(zé)公司的財(cái)務(wù)，包括財(cái)務(wù)規(guī)劃，風(fēng)險(xiǎn)管理，報(bào)告和分析，CFO將直接向CEO匯報(bào)，CEO是公司的最高執(zhí)行官。然而，由于這兩名高管在公司中扮演著最重要的角色，根據(jù)過去的文獻(xiàn)，我們將進(jìn)行另一項(xiàng)測試，假設(shè)這兩名高管(CFO和CEO)根據(jù)他們的知識(shí)和經(jīng)驗(yàn)對(duì)公司采取不同的行動(dòng)。由于CFO對(duì)公司的財(cái)務(wù)業(yè)績了解較多，因此其風(fēng)險(xiǎn)規(guī)避能力較CEO強(qiáng)。
Two side sample T-test
The two-sample t-test (Snedecor and Cochran, 1989) will be conducted to check whether sample means of two group are equal. I will separate level of risk management and investing decision nominated by hedging decision and R&D expenditure accordingly into the 3 level groups tranches, and check test the hypotheses whether mean for CEO and CFO are the same.
Robustness test健壯性測試
A limitation to our study is that although inside debt tend to make executive become risk averse at higher level, this is hard to claim that this positive relation may cause by executive with higher level inside debt have higher likelihood to push company at risk in speculative strategy and separately manage to diversify their individual portfolios.
我們研究的一個(gè)局限是，盡管內(nèi)部債務(wù)傾向于使高管在更高水平上變得厭惡風(fēng)險(xiǎn)，很難斷言這種正向關(guān)系可能是因?yàn)閮?nèi)部債務(wù)水平較高的高管更有可能在投機(jī)策略中將公司推向風(fēng)險(xiǎn)，并分別設(shè)法分散其個(gè)人投資組合。
Inside the inside debt consists of two main parts, pension and deferred compensation, so I would like to further check the effect which one is more influence to explain the dependent variable in above hypothesis test (hedging level and R&D decision)
Next, the inside debt of executive also could be separate in other ways such as into secured and unsecured portion. Different natures of the inside debt are expected to have an effect on the result in different way. In my opinion, I believed unsecured inside debt will make executive become more risk averse. This variable will be include in the model for further investigation.
Further study進(jìn)一步的研究
Further study could be helpful to mitigate endogeneity issue of inside debt effect to risk management and investing decision such as using two stage least square method to check effect to model. From our main analysis we made assumption that inside debt is exogenous, this proposed method will provide the results that expect to be consistent with our main result.
進(jìn)一步的研究，如采用兩階段最小二乘法對(duì)模型進(jìn)行檢驗(yàn)，有助于緩解內(nèi)部債務(wù)效應(yīng)對(duì)風(fēng)險(xiǎn)管理和投資決策的內(nèi)生性問題。在我們的主要分析中，我們假設(shè)內(nèi)部債務(wù)是外生的，提出的方法將提供預(yù)期與我們的主要結(jié)果一致的結(jié)果。
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