| China began to implement the Anti-Monopoly Law on August 1,2008,gradually establishing a competition policy system with the Anti-Monopoly Law as the core.It focuses on four kinds of monopoly behaviors: monopoly agreement,concentration of operators,abuse of dominant market position and administrative monopoly.Anti-monopoly is aimed at these monopolistic behavior to give legal prevention,check and punishment.Since the implementation of the Anti-monopoly Law,we have continuously strengthened the construction of anti-monopoly law enforcement agencies,improved the anti-monopoly legal system,deepened the intensity and scope of the crackdown on monopoly behavior,and achieved the effect of deterrence and regulation on the implementation of monopoly behavior by market subjects,promoting the chaotic market order to be fair and orderly.In the aspect of striking and regulating monopoly behavior,the implementation of anti-monopoly Law has achieved effective results,which has played a driving role in accelerating the pace of competition development and promoting social and economic development.Therefore,the effective implementation of anti-monopoly Law will break unreasonable institutional barriers,change the situation that enterprises rely on non-productive external forces to occupy the market position,guide enterprises to improve their own vitality,and maintain good market competition order.Since the implementation of anti-monopoly Law more than ten years ago,anti-monopoly law enforcement has been gradually normalized and promoted the improvement of market competition environment.Competition is the basis of the market economy.At the same time,as an external governance mechanism,it can make up for the lack of internal supervision,exert market competition pressure on managers,improve the information environment,and may play a certain degree of governance effect.Under the principal-agent relationship,shareholders have the ownership of the enterprise,while managers have the right to control the operation of the enterprise,and the interests of the two are different.In the environment of incomplete information,private interests may drive managers to make decisions that are not conducive to shareholder value maximization,resulting in the first type of agency problem.First of all,managers may weaken the effectiveness of compensation incentive mechanism for their own interests.Effective compensation contract is an important mechanism for enterprises to alleviate the agency contradiction between shareholders and managers,but compensation incentive itself may also become a means for executives to seek personal gains.Senior executives are important decision-makers of enterprises and participate in the formulation and implementation of corporate decisions.The formulation of corporate compensation mechanism is often influenced by senior executives.Driven by the self-interest motive of executives to increase their personal wealth and their decision-making power,compensation contracts often become tools for executives to increase their personal interests,which deviate from the compensation level under the optimal compensation contract and weaken the effectiveness of compensation contracts.Secondly,managers may seek personal gains through inefficient behaviors in the process of operation.Managers may use their own power to waste company resources for personal enjoyment,thus stimulating in-service consumption;Managers may also make inefficient investments and reduce the capital utilization efficiency of enterprises in order to expand their personal power or enjoy a peaceful life.According to the corporate governance theory of maximizing shareholder value,corporate governance focuses on the principal-agent problem between shareholders and managers.Through effective corporate governance,agency contradiction can be alleviated and shareholder wealth can be increased.Then,as a competition policy to promote the development of market competition,can China’s Anti-monopoly Law play a governance effect?In the past,the governing effect of competition has not formed a unified conclusion.One view is that market competition as an external governance mechanism,competitive pressure and the improvement of information environment will force enterprises to reduce costs and play a governance role.Another point of view is that the compression of profit space brought by competition may also reduce the marginal revenue of managers’ efforts,thus weakening the incentive for managers’ efforts,and the competitive pressure may intensify managers’ earnings manipulation and aggravate agency contradiction.Moreover,in the previous literatures on the effect of corporate governance in market competition,market concentration or regional marketization index were mostly used as the measurement index of the degree of competition,focusing on the correlation between market competition and enterprise behavior,and paying less attention to the causal relationship.In addition,when market concentration is used as a variable to measure market competition,there may be reverse causality or endogeneity that omits important explanatory variables when studying its influence on micro firm behavior.Based on this,this paper takes the implementation of the competition policy of "Anti-monopoly Law" as the policy impact to strengthen the development of market competition,and uses the differential difference model to explore what kind of governance effect the implementation of "Anti-monopoly Law" will produce.First of all,as an important means of governance,incentive mechanism has always been the core research topic in the field of corporate governance.The implementation of anti-monopoly Law has changed the competitive environment,which will fundamentally affect corporate governance and be reflected in the incentive mechanism.Secondly,in-service consumption and inefficient investment are important manifestations of managers’ inefficient behaviors in business activities and investment activities,and have always been an important issue of concern in corporate governance research.From the perspective of governance effect,the implementation of anti-monopoly Law will also have a certain impact on managers’ inefficient behavior.Then,can the implementation of anti-monopoly Law improve the effectiveness of executive compensation incentives? Can executives’ in-service spending be curbed? Can the level of inefficient investment of enterprises be reduced?Based on this,this article on the industrial organization theory and the theory of corporate governance as the backing,the a-share listed companies from 2005 to 2012 as the research object,from the executive compensation incentive effectiveness,on-the-job consumption,from three perspectives of investment efficiency,using the double difference model to explore the governance effect of the anti-monopoly law.First,according to the monopoly power of enterprises,the treatment group and the control group are divided to test the influence of the Anti-monopoly Law on the effectiveness of executive compensation incentives,in-service consumption and inefficient investment.Secondly,it explores the mechanism of the influence of anti-monopoly Law on the effectiveness of executive compensation incentive,on-the-job consumption and inefficient investment.Furthermore,according to the characteristics of enterprises,the heterogeneity test of corporate governance effect of anti-monopoly Law is conducted.The research content and results of this paper are mainly reflected in three aspects :(1)explore the influence of anti-monopoly law on the effectiveness of executive compensation incentives.The results show that,after the implementation of the Anti-monopoly Law,the sensitivity of executive compensation performance of enterprises with high monopoly power is increased compared with those with low monopoly power,that is,the effectiveness of compensation incentive is improved.The mechanism test shows that the implementation of anti-monopoly law reduces the market power and the level of earnings management.Moreover,in companies with large boards of directors and auditors from non-Big Four firms,the effect of anti-monopoly Law on executive compensation performance sensitivity is more significant.This paper further examines the executive compensation incentive level of the implementation of the Anti-monopoly Law,and finds that the implementation of the Anti-monopoly Law reduces the monetary compensation level of enterprises with high monopoly power,and improves their equity compensation level.(2)Explore the influence of anti-Monopoly Law on executives’ in-service consumption.The results show that compared with enterprises with low monopoly power,the in-service consumption level of executives of enterprises with high monopoly power is significantly lower.Moreover,the anti-monopoly Law has a governance effect on in-service consumption by weakening the market power of processing group enterprises and reducing their free cash flow level.Heterogeneity test shows that in enterprises with high ownership concentration,auditors from non-domestic top ten firms and high operational risk,the influence of anti-monopoly Law on on-the-job consumption is greater.After the implementation of the Anti-monopoly Law,it is found that compared with the enterprises with low monopoly power,the monetary private income of the executives of the enterprises with high monopoly power also shows a significant trend of decline.(3)Explore the influence of anti-monopoly Law on inefficient investment of enterprises.The results show that the implementation of anti-monopoly Law reduces the inefficient investment level of enterprises with high monopoly power,and mainly restrains their over-investment behavior,and has no significant impact on the under-investment.Moreover,the Anti-monopoly Law has changed the level of market power and financing constraints of enterprises.The governance effect of anti-monopoly Law on inefficient investment mainly exists in enterprises with high equity concentration and cash dividend payment.Based on the institutional background that the implementation of the Anti-Monopoly Law promotes the development of market competition,this paper explores the impact of the implementation of the Anti-Monopoly Law on the effectiveness of executive compensation incentives,on-the-job consumption and inefficient investment.Possible research contributions are mainly reflected in the following three aspects:(1)Fair and orderly competition order is an indispensable condition for the healthy development of market economy,and the implementation of anti-monopoly system is an objective requirement to promote the construction of fair competition order.This paper focuses on the governance effect of the implementation of the Anti-Monopoly Law on micro enterprises,which is of great significance to understand the relationship between law and enterprise behavior,and enricifies the relevant research on the consequences of the implementation of the anti-monopoly Law as competition policy.(2)the previous scholars on the study of the corporate governance effects of market competition,the research object more qualified in state-owned enterprises,pay close attention to the development of marketization of state-owned enterprise salary incentive mechanism,the influence of or pay more attention to the market competition regulation role in corporate governance,based on the implementation of the "anti-monopoly law" as a policy to promote the development of market competition,This paper studies the influence of executive compensation incentive effectiveness,in-service consumption and inefficient investment,and provides a basis for the governance effect of market competition.(3)Previous researches on market competition mostly use market concentration to measure the level of market competition.When studying its influence on micro firm behavior,there may be endogenous problems such as reverse causality and omission of important explanatory variables.This paper uses the implementation of the Anti-monopoly Law as an exogenous impact to strengthen the level of market competition,uses the dual difference model to test the governance effect of competition policy,and expands and improves the research perspective and methods on the impact of market competition on enterprise behavior.(4)As an important policy to strengthen the development of market competition,anti-monopoly Law promotes the external governance effect of market competition.Previous studies paid little attention to the implementation of Competition policy in China,and whether it could exert governance effect on the basis of promoting market order area to become fair.Based on the background that the Anti-monopoly Law strengthens the development of market competition,this paper explores the governance effect of market competition and expands the perspective of corporate governance research.On this basis,this paper puts forward the following policy suggestions :(1)the legislature should constantly improve the anti-monopoly law system,formulate relevant regulations and implementation guidelines,to provide a strong legal guarantee for the smooth implementation of anti-monopoly work;(2)Anti-monopoly law enforcement agencies in the process of law enforcement,in the face of different nature,different industries,different geographical market players,to reduce the tendency of law enforcement,deepen the intensity and depth of the fight against monopoly behavior;(3)In the process of formulating relevant policies,the government should coordinate the relationship between the government,the market and enterprises,and give full play to the role of "visible hand";(4)Enterprises should actively participate in the construction of fair market competition order. |
PDF Full Text Request