An Empirical Study On The Relevance Of Media Monitoring And Perks From Listed Companies In China

As the product of incomplete contract, Perks is a ubiquitous phenomenon. However, the excessive Perks would increase unnecessary agency costs and damage the benefits of enterprise owners. As the implicit incentives of the control rights of managers, Perks is reasonable. And it has also played economic functions in daily business activities, such as expense to maintaining clients and so on. However, Perks cover many trivial and complicated expenses and there is no definite accounting subject could cover all the expense. The above reasons have resulted in the fuzziness of the definition of Perks, which could provide protective umbrella for the behaviors of internal personnel to obtain private benefits which are not ruled in the official incentive contract. Executives, who do not only understand the internal institution of the business but also have control power, could acquire more profits by taking advantage of the leak of the institutions. Currently, the overall situation of the disclosure of the Perks is not optimistic. There are nearly less than half of the listed companies would choose to disclose their Perks every year. And the quality of the disclosure is not ideal. And there is a huge otherness among the amount of Perks. As an important part of agency cost, it is necessary and authorized that the stakeholders should understand the specific situation of Perks. The over investment in Perks could resulted in an exorbitant agency cost which would decrease the competitiveness of the business and impair the profit of stakeholders. And the Perks are related to the distribution of the social income. Thus, the thinking on governing Perks is triggered. Most of the current studies focus on relying law and institution to govern Perks, but the consequence is not desirable, especially in the transition economy in which there are some leaks in the law and institution. This paper is trying to break through traditional research perspectives, focusing on the effectiveness of media monitoring, a mechanism beyond law and institution, to govern Perks.Firstly, this paper has sorted out the relation between media monitoring and Perks and put forward the corresponding assumption basing on the related theories, including corporate governance theory, principal-agent theory and some related theories about media by summarizing and concluding the current studies. And then this paper has collected the data from the companies which have listed in the Shanghai Stock Exchange and Shenzhen Stock Exchange with A share from2010to2012as sample. This paper has conducted a series of empirical examination basing on the results of descriptive statistics on the sample. The series of empirical examinations include examination on the relation of media monitoring and Perks, examination on the difference of the media monitoring on the listed companies with different actual controllers and examination on the mechanism of the media monitoring to improve corporate governance level to govern Perks.Surrounding on the research topic, there are six parts in this paper:the first paper is the introduction, mainly elaborating the significance of the topic and research background, research contents and research method, and innovation points; the second part is a literature review, sorting out the relation between media monitoring and Perks by reviewing on the pertinent literatures on media monitoring and Perks domestic and overseas; the third part is mainly to analyze the related theories and put forward the three assumptions in this paper; the fourth part is to introduce the stud design, including sample selection and data source, variable designs and model design; the fifth part is the empirical examination and analysis, including descriptive statistics on sample and the empirical examination on the three assumptions; the sixth part is to propose some policy and suggestions basing on the empirical conclusion.This paper shows that the media monitoring could govern Perks of executives significantly by conducting research. However, the negative reports on state-owned listed company could not govern their Perks. In the meanwhile, the Catfish Effect of media monitoring is not confirmed by another empirical study. In other words, listed companies would not improve their inner corporate governance mechanisms to govern the behaviors of Perks of executives.