A Study On The Impact Of The Rich List On Executive Perks

In recent years,the excessive executive perks has repeatedly triggered social disputes.The public and the media criticized the senior executives for abusing the company’s resources for personal gain.Investors also expressed disappointment at the extravagant and hedonistic behaviors of the actual controllers of the enterprise,such as living in high-end hotels and sitting in first class.Especially in the current context of inadequate corporate governance and severe information asymmetry in China,the issue of in-service consumption has attracted widespread attention.The executive perks is reasonable to some extent.,but excessive executive perks will also damage the interests of the company.Existing literature mainly focuses on internal factors such as company characteristics and internal controls when studying the influencing factors of executive perks,and there are few studies on the impact of external factors on executive perks.As an exogenous event,the announcement of the Hurun Rich List provides a good opportunity for us to study the impact of public attention on the excess executive perks.The Hurun Rich List was first announced in 1999,the scope of its statistics has become increasingly extensive,and the methodology has become more precise.To a certain extent,it reflects the development of China’s economy over the years.The inclusion of rich people on the List has aroused the attention of the media and the public to their affiliated companies.While reducing the degree of information asymmetry,it can also constrain the management to pay more attention to corporate governance and reduce agency costs.In this paper,we manually collect the information about the rich people or families on the Rich List from 2007 to 2019 and adopt a difference-in-differences(DID)approach to investigate the changes in executive perks of firms after the listing event compared to that of firms not influenced by the event.We consider the entrepreneur’s first listing as the event year.We come into the following conclusions:(1)After the firm’s actual controller is listed on the Rich List for the first time,the excess executive perks will be significantly reduced compared with the company that is not influenced the list.(2)The inhibitory effect of the Rich List on the executive perks is mainly by improving the company’s external information environment and internal governance.(3)In terms of heterogeneity analysis,the impact of the Rich List on the excessive perks is more significant in enterprises with less financing constraints and small scale.In addition,this paper also proves the reliability of the research conclusion through a series of robustness tests.At last,some guiding suggestions related to executive perks are given.The unreasonable executive perks of listed companies can be effectively controled by strengthening the external supervision role of the media,improving the internal governance level of the company and building a reasonable mechanism of executive perks.