| The ownership and control power separation in modern enterprises may lead to management board to implement behaviours that are harm to the interest of the shareholders and cause principal-agent problem. Thus, finding effective incentive and constraints for enterprise operational management board to maximize the interest of the shareholders for the up limit has been one of the core targets of corporate governance, and one of the focus problems in modern enterprise theory and management practice as well.In theory, the executive changes, as one of the incentive and constraints mechanism, can solve the principal-agent problem with an active cooperation between internal and external corporate governance mechanism. In terms of internal governance mechanism, many studies have found that the performance of listed companies has positive significant relationship with the manager position change. However, past researches often focused on the long-term accounting performance of enterprises, researches about influence of incident-caused heterogeneous volatility of stock price on CEO position change are few. In addition to the internal governance mechanism, the external media supervision effect on executive positions changes has become an increasingly highlight. To pursuit for social reputation and business interests, media often find out previously, expose and supervise corporate governance problems automatically. However, studies about the effects of media on executive position changes are still relatively absent in China. On the one hand, manager employment market in China is still imperfect. Managers hiring cannot practice marketization totally, especially among the state-owned enterprise managers, who usually have political background. Even if the management boards gave an issue to the enterprise, hardly could they receive any punishment of demotion. On the other hand, media’s watchdog role may also be limited by the policy of local government. Lack of independence, Media may report biasedly or even erode real facts. Whether and how the external media can play a role of governance, chanels and effect of media governance all require further research.But for the effective mechanism of internal and external corporate governance, would CEO personal characteristics hinder their position changes? Some researches showed that, CEO may run away from position change punishment under the protection of reputation. There are many managers’ personal characteristical factors that may affect their position changes, such as whether the manager dually hold the post of chairman in the board directors, whether the manager has a political background and has positions in other institutions, etc. Whether, how far and the way CEO reputation influences their position changes, however, has also been few explored so far.Using the CEO data of Forbes Worst CEO List from2006to2011as the samples, this paper empirically analyses the influences, which include firm performance, media supervision and CEO reputation, on CEO position changes, including position number changes and position movement changes. Firstly, I find that the probability of negative CEO position changes after the list release increase significantly compared to the years before. Moreover, the effect of the media’s negative reports beforehand on position change is greater than that afterwards. After the list year, CEO position changes show significant positive correlation with corporate performance and the list-caused stock price volatility as well. After controlling corporate performance factors, governance and characteristics factors, negative media reports significantly improve the probability of CEO position changes. Furthermore,I have selected totally twelve factors and construct a CEO reputation index RI,including CEO’s gender, age, education level, whether he is a chairman or not, numbers of committee position he holds in the company, whether he is the founder of the company, tenure, succession sources (internal promotion or external), candidate selection (elected by the controlling shareholder or professional manager), political background (whether he used to be a NPC member, a NPC Standing Committee member, a CPPCC member or has served in the government department), whether he has positions in other institutions, whether he has been punished or warned by the Securities Supervision Commission. By building a CEO reputation index, I find that CEOs of high reputation are less likely to be punished by position change even if they face a poor corporate performance and a large scale of negative reports, benefiting from the reputation they have built. Finally, I study the influence of regional media development situation on performance-position change sensitivity and find that the better the media develops, the higher the sensitivity of executive performance-position change, is namely enterprise internal governance mechanism is more efficient. It further proves that the media is of strong vitality as a kind of external governance mechanism.As for the study methodology, I mainly use inductive analysis methodology comparison analysis methodology, event study methodology and empirical analysis methodology. First of all, I adopt inductive analysis method and comparison analysis method to comb and review both domestic and foreign literatures about the CEO position changes and the corporate governance of media, summing up the points of the CEO position change under the internal governance mechanism and external governance mechanism path. Secondly, based on the sample of Forbes Worst CEO List from2006to2011,I use event study method to study the CEO position changes differences before and after the list year, to show the descriptive statistics of media reports. I have also concretely analyzed a series of corporate performance change, CEO position change and media coverage change before and after the list was released. In empirical research stage, I make a hypothesis on the basis of theoretical analysis of inference, construct variables according to the manually collected data and downloaded data in the database, create a regression model, get and analyze results. Particularly speaking, newspaper reports data comes from China important newspapers full-text database in Chinese CNKI; Executives personal characteristics, corporate governance indicators, corporate performance indicators and other financial datum are obtained from CSMAR database; Executive positions change information are of manual collection; The empirical model are processed by software of Excel2010and Stata11; The order logit model is adopted for regression.The significance and value of this paper research is mainly manifested in the following three aspects:Firstly, I not only studied about the effect of performance as an internal governance mechanism and the media as an external governance mechanism on the CEO position change, but also studied the interaction role of them on CEO position, through which I try to enrich frontier research. Secondly, my study is helpful to improve Chinese enterprise research of CEO reputation. By building a CEO reputation index, this thesis gives direct evidence of CEO reputation effect on the position changes. My research may play a reference role on relevant governmental discipline when it comes to regulations of CEO behavior constraint. Thirdly, it can also help to improve the internal corporate governance in China. As Chinese legal system is imperfect, policy execution is insufficient and our government lacks supervision, strengthening supervision of the media can urge faster to improve the internal governance mechanism in China.As one of external corporate governance, media can finally reduce agent cost through promoting the share of information, increasing the pressure of moral hazard and improving the efficiency of issue deal.Innovation of this essay consists in three sides:firstly, apart from focused on the influence of long-term performance on executive positions change, this article take the share price volatility caused by the emergency into account. In addition, during study process, I also divide changes into position number changes and position movement changes. It is more in line with China’s national conditions when discussed from the two cases respectively; Secondly, different from post-supervision, this paper starts from the prior restraint of media reports to explore the media’s role in corporate governance, expanding the research literature about media governance effect.In this paper,I find that the regional media development is advantageous to the company’s internal governance.This evidence is surely a more step to verify the necessity of the media development in corporate governance;Thirdly, by constructing a CEO reputation index, this paper has analyzed the influence of CEO personal characteristics on position change. I find that if CEO were also the chairman of board, had political background, hold positions in other institutions concurrently, he would not be conducive to the operation of internal governance mechanism. So my research could establish a deeper understanding of the complex factors on CEO position change. |
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