Rearsh On The Surveillance Effect Of Media Coverage On Executive Compensation

The topic of Executive Incentive has been discussed for long in corporation governance. Based on the present background of deepening reform comprehensively, astronomical managerial compensation and irrational non-pecuniary compensation provoke outcry of the public who appeal to fairness and justice. In recent years, media governance (MG) keeps rising. In some literatures, media monitoring, embedded in formal institutional settings such as legal system and administrative supervision, is considered as a supplementary mechanism rooted in traditional social norms, and facilitates those settings mutually, with the help of reputation and information dissemination. According to this line, we try to test whether media monitoring plays a role in suppressing excessive growth of managerial compensation and in controlling unreasonable non-pecuniary compensation.In addition, according to Communication Theory, the media, exposed to modern entertainment and intensified market competition, fails to report unbiasedly in order to cater to readers and to pursue economic benefit, causing selection deviation and opinion deviation. Although western scholars are aware of media deviations and their consequence, media deviations are seldom considered in media governance researches. Furthermore, the public know about executive compensation and non-pecuniary compensation mainly through the press coverage. Thus,it is necessary to verify whether media governance and monitoring are affected by media deviations.Using listed companies in Shanghai and Shenzhen main-board market as the samples, we test and prove that media monitoring suppresses excessive growth of executive compensation. But the effectiveness of monitoring is affected by scale deviation and industry-specific deviation. Firstly, media governance works on only large companies and the technology-based small-sized companies. And, the more media exposure of an industry, the weaker the governance effectiveness is. Moreover, it is also necessary to pay attention to overall media governance effectiveness, because, according to the further investigation, the executive occupy more company-paid consumption as the substitute of some managerial compensation under the media monitoring. The paper investigates media deviations which have not been researched in depth and tests the economic consequence of media governance by researching non-pecuniary compensation which is a new dimension.