State Ownership, Managerial Power And Perks

Perks of managers is a common phenomenon in almost all enterprises. In theory, the presence of perks is certain rationality. But in China’s state-owned enterprises (SOEs), there are some issues such as opacity, losing of control, messy project, casual spending and so on in perks of managers. The phenomenon of excess perks of senior administrators in SOEs has caused wide public concern.Based on managerial power theory, this thesis focuses on the analysis of the effect of managerial power on perks of managers and tries to build a theoretical framework of the dynamic mechanism of managerial power affecting perks of managers. The thesis tries to study the effect of managerial power on perks of managers from two perspectives of internal governance mechanisms and external institutional environment. We study whether there is difference in the effect of managerial power on perks of managers in different ownership structure. Meanwhile, we study whether there is difference in the effect of managerial power on perks of managers in regions with different marketization. Utilizing the information on perks disclosed in annual reports and their annotations of A-Stock listed companies in Shenzhen&Shanghai Stock Exchange from2008to2010, this thesis empirically analyses the effect of managerial power on perks of managers, and the effect of internal governance mechanisms and external institutional environment on the relationship of managerial power and perks of managers. The result shows:(1) perks of managers in state-owned enterprises are more than in non state-owned enterprises;(2) for state holding enterprises, the greater the managerial power, the more the perks of managers;(3) the higher the degree of Outside Blockholders, the stronger the relationship in managerial power and perks of managers in state-owned enterprises;(4) the higher the marketization, the weaker the relationship in managerial power and perks of managers in state-owned enterprises. According to results from theoretical and empirical analysis, this thesis puts forward some policy recommendations to regulate perks of managers and take advantage of perks in incentive contracts.