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Abstract Based on the systematic literature review method，this paper sorts out and analyzes the literature on the attributes, measurements, paths, and governance effects of executive debt-based incentives. Compared with salary and equity incentives, the research finds that executive debt-based incentive has unique attributes, such as uncertainty of future payment, high sensitivity to corporate liquidation value, and inhibition to the risk-taking tendency of executives. Based on the optimal contract theory and the managerial power theory, executive debt-based incentive has two different paths, one is to reduce the agency cost by realizing incentive alignment, the other is to highlight the rent-seeking effect and increase the outrage cost. In the current practice, executive debt-based incentives have positive governance effects on the corporate risk-bearing level, corporate governance level, strategic decision-making, corporate value, and stakeholder behavior. Based on above analysis, the research framework of achieving the governance effect of debt-based incentives and the main deficiencies are elaborated.
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Received: 24 March 2020
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