An Empirical Study On The Relationship Between Executive Power, Firm Size And In - Service Consumption

The business owners grant more and more control to the senior executives in the modern enterprise, which is based on the agency relationship. In the SOEs, the process of releasing the power by the government is the one in which the state-owned enterprises executives be given more power continually. Executives, who grasp the full range of business information, are important business decision-makers. However, the asymmetric information and transaction costs result of the agency and contractual relations provide more operating room for the executives. It’s common that the executives abuse their power to obtain additional revenue, which is more serious in the state-owned enterprises. Due to the characteristics of uncertainty and concealment, post consumption becomes one of the main ways for the executives to gain profits.It’s generally confirmed by domestic and foreign scholars that the larger the enterprise, the higher pay level the executives get,the easier it is for senior executives to obtain private benefits. The larger scale, the more control of extensive resources. Then the ways to get more benefits becomes more. The advancement of the state-owned enterprise restructuring process creates conditions for enterprise expansion. Because of a series of salary regulation policies, the way to enhance monetary remuneration by enterprise-scale expansion is restrained, which eventually leads to the phenomenon that the higher positions, the more functionary overspending.This paper tries to verify the practicability of executive power in our country under the special background, attempts to reveal self-interest behavior that executives may use its power to strengthen relationship between enterprise scale and the on-the-job consumption,and The influence of ownership on the relationship between enterprise scale and the on-the-job consumption.The study were collected from A-share listed companies in Shanghai Stock Exchange and Shenzhen Stock Exchange, during 2012~2014, totally 2718 study samples, from the database of CSMAR and WIND. It’s found that the bigger the scale of state-owned companies, the higher agent cost caused by post consumption. Similarly as the higher power of top management in enterprises. Besides, the relationship between firm size and post-related consumption can be enhanced by chief executive in large power, and it’s the same as managerial ownership. Therefore, the article puts forward reasonable suggestion about the corporate governance mechanisms, including four dimensions of incentives, constraints, budget and evaluation.