Manufacturing Enterprise Executive Career Expectation and Enterprise Risk: Theoretical Path and Empirical Evidence

Abstract

This paper takes listed companies in Shanghai and Shenzhen stock markets as research samples to analyze and test the relationship between executive career expectation and enterprise risk. This paper argues that manufacturing enterprise executive career expectations have a dual impact on corporate risk, one is to increase corporate risk through investment effect, the other is to reduce corporate risk through reputation effect. The results show that, in the two effects, reputation effect plays a leading role, that is, the higher the career expectation of executives, the more attention they pay to the professional reputation they try to build. In order to protect their own reputation from damage, executives pay more attention to the risk management and internal control of enterprises, so as to reduce the risk of enterprises. This also shows that reputation has a "implicit" incentive effect on executives .This study provides a theoretical basis for enterprises to formulate "explicit" and "implicit" incentive contracts.