Senior Management Power，Payment Control and Creditors' Interests—Evidence from Listed Companies in China

Human capital is the key resource for modern companies,and compensation system is the main incentive tool to gain human capital advantage. However,compensation systems are often manipulated by senior executives and have a negative impact on the interests of creditors. This paper finds that,when senior executives have greater power because of their expert ability,their decision would be more dominative and fail to offer the diversification benefit of group decision. Therefore,senior executives can manipulate the payment system easily. Furthermore,senior executives power would increase the possibility of suffering wrong decisions and hurt the persistence of firm performance. It could deteriorate a firm's credit rating and bond holders would require more premiums for taking higher risk. The decision of bond duration is associated with the tendency to reducing bankruptcy crisis.