Perks And Firm Value:from A Media Governance Perspective

In recent years, the domestic and foreign media exposure executive perquisitesfrequently, making perquisites become a hot topic in academia. In China, the phenomenon ofexecutive perquisites have been a long time and deeply rooted. However, the current study onexecutive compensation in academia is still confined to monetary compensation and incentive,research on executive perquisites which is an important part of executive pay is far laggingbehind the need of the practice development. Therefore, research on perks have importantpractical significance and theoretical value.The existing literature on perks mainly formed two contrary viewpoints: the agent viewand the view of efficiency. The agent view holds that perks are detrimental to corporate value,while the efficiency concept considers that perks help to improve the managements’ workefficiency and the company’s operational efficiency, playing an active role of creatingcorporate value. On the basis of existing research, using the game analysis method, this paperfirstly constructs an optimal compensation contract model after considering executive perks,and theoretical deduces the relationship between perks and corporate value in the case ofexecutive moral hazard.Information dissemination functions of the media greatly eliminates the informationasymmetry between management and shareholders, through the media supervision and byguiding public opinion, the role of media governance has gradually appeared. Based on thetheory of media governance, this paper analyzes the media governance mechanism onexecutive perks, and presents the transmission mechanism between executive perks andcorporate value from the media governance perspective.Based on the theoretical analysis, this paper manually collected the data of executiveperks, media governance and other variables in Chinese listed companies during2004to2012.Using descriptive statistics, correlation analysis, univariate analysis, panel data regressionmodels and other statistical and quantitative analysis methods, the paper tested therelationship between the media governance, executive perks and corporate value, anddiscussed the empirical results in detail. Through theoretical analysis and empirical analysis,this paper drawed the following conclusions:(1) The different structure of executive compensation contracts result in the coexistenceof agency concept and efficiency concept. Specifically, when there are substitutes betweenperquisite consumption and monetary compensation (high monetary compensation and lowperquisite consumption, or low monetary compensation and high perquisite consumption), the efficient view is supported; and when the perquisite consumption and monetary compensationare complementary to each other (high monetary compensation and high perquisiteconsumption, or low monetary compensation and low perquisite consumption), the agentview is supported.(2) Media governance as an external corporate governance mechanism has thesupervision and governance function on executive perquisites. First of all, the media plays anactive monitoring function, when executive perquisite is too high, especially a higher excessperks, the media attention on listed companies will be strengthen, playing a positivesupervision function; secondly, the media attention on the listed companies can play asignificant inhibitory effect on executive excess perks and have a significant impact on thestructure adjustment of executive compensation contracts.(3) Media plays a significantly positive regulatory role on the relationship of executiveperks and corporate value. Even after the distinction media ownership, the corporategovernance role of media still has stronger positive impact on perks and corporate value,especially having a strong inhibitory effect on the negative relationship of perks and corporatevalue under the complementary structure.The main innovation of this paper are as follows:Firstly, the paper constructed an optimal compensation contract model after consideringperks, and drawed on the applicable circumstances of the agent concept and efficiency viewrespectively, which provides a new theoretical explanation for the current debate. Through theanalysis of the theoretical model as well as empirical test on Chinese listed companies, thepaper found that there has a substitutive and complementary relationship between perquisiteconsumption and monetary compensation at the same time, different compensation structureled to the agent view and the efficiency view coexist phenomenon.Second, by handing collect and programming acquisition lots of data, this papersystematically studied the media’s corporate governance role on executive perks of Chineselisted companies. The research showed that media governance has a significant inhibitoryeffect on excess perks, providing the governance methods for executive perks from theperspective of the media governance and offering decision-making reference which will helpthe regulatory agencies to supervise on executive perks effectively. This study is differentfrom the existing literature which select special small sample data and the conclusion is notuniversal. What’s more, this paper expands the existing literature on media governance, andhas other certain significance for the field of corporate governance research.Third, from the perspective of media governance, the paper integrated management theory, economics and mass media theory, theoretical analyzed and empirical tested the affectof media governance on the relationship between perks and corporate value, and found thatmedia governance has a positive adjustment effect on the relationship between perks andcorporate value. The conclusion not only provides empirical evidence of the mediagovernance role in the capital markets of emerging countries, but also expands the research on"media governance theory", making a certain contribution for the ex-legal corporategovernance research. Meanwhile, this paper further considered the different types of mediagovernance effect and provides empirical evidences of market-oriented and policy-orientedmedia governance effect, which enriches the existing empirical research on "media biastheory".