Media Coverage,executive Compensationand Corporate Performance

In the modern society with increasingly developed media information,media coverage as an external factor of corporate governance is becoming an important means of external supervision.Media reports on executive compensation occupy a large proportion in media reports on corporate governance.The number of media reports on executive pay increased sharply during the financial crisis in 2008.This is because,under the environment of financial crisis and economic depression,some enterprises' performance is not satisfactory,but executive pay is still high.With the news of "sky high pay",the media and the public questioned whether executives' high salaries match their business performance.In these companies,China's state-owned enterprises are playing a very important role in the national economy,and are related to the national livelihood and national plan,so it has become an important target for the media.Because of the policy protection,the performance of the state-owned enterprises is not entirely from the hard work of the executives,so the correlation between the executive compensation and the enterprise performance of the state-owned enterprises has become the hot spot of public concern.In order to increase sales volume and click through rate,media is also happy to report this kind of hot news.Due to media reports,business performance and executive compensation related information spread rapidly,which makes the reputation and operation of enterprises affected.In reality,media reports,based on reputation mechanism,principal-agent and administrative intervention,affect executives' business behavior and contractual remuneration.For example,in the period of the financial crisis,due to the high social attention caused by the media's report on executive compensation,China issued a "salary limit order" in 2009 to regulate the remuneration of executives of state-owned enterprises and mobilize the enthusiasm of senior executivesIt can be seen that the media's supervisory role on corporate governance has become increasingly prominent,and scholars have also studied the impact of media coverage on corporate governance from different perspectives.However,the specific impact of media on executive compensation and corporate performance isvery few.Under this background,this paper studies the impact of media coverage on executive pay and performance in state-owned enterprises.This study chooses China's state-owned manufacturing listed companies as the research object,from 2010 to 2015 as observation period,manually collecting data from media reports,and classifying media reports into negative reports and non negative reports.On this basis,we study the impact of different media coverage on executive compensation ? the relationship between executive compensation and enterprise performance,and whether different media coverage can improve the correlation between executive compensation and corporate performance.Through theoretical analysis and empirical analysis,this paper draws the following conclusions:(1)the study found that there is a negative correlation between negative media coverage and the executive compensation of state-owned enterprises,in other words,the negative media coverage more,executive compensation is lower,indicating that the negative media coverage have inhibitory effect on executive compensation.There is a positive correlation between non negative media coverage and executive compensation,in other words,the more media non negative reports,the higher executive salary increases with the increase of their reputation.(2)The empirical test results of the executive compensation and enterprise performance of the listed companies in China's state-owned manufacturing industry show that there is a significant positive correlation between the two.It shows that executive compensation is linked to corporate performance.Enterprise performance increases with the increase of executive compensation.(3)Media negative reporting can enhance executive compensation's role in promoting corporate performance,that is,it has a significant effect on corporate governance;media non negative reporting has no significant effect on corporate governance,and can not enhance executive compensation's role in promoting corporate performance.