Impact Of The Media Attention On Executive Compensation

Since China’s listed companies to disclose executive pay, executive pay has been a sensitive issue which affecting the social nerve. Currently supervision on executive pay are mostly dependent on the board of directors and other internal corporate governance mechanisms. With the outbreak of the 2008 economic crisis, there has been a lot of negative reports about the "astronomical executive pay", which means that the traditional internal governance mechanisms can no longer meet the requirements of corporate governance, but also consider the role of external mechanisms of corporate governance. Represented by LLSV scholars begin to focus on the important role of the legal system to improve corporate governance and financial development. However, existing studies show that the legal protection of investors is relatively weak in transition economies, totally dependent on the legal system for monitoring executive behavior is not scientific. At the same time, the mass media and information technology development makes the role of the media is increasingly important in the social life. The function of information transfer and the mission of disclosure of the social reality making role of the media in corporate governance got extensive attention in academia. Therefore, to study the effect of media attention on executive pay has important practical significance and theoretical value.The purpose of this study is to explore the impact of media attention on executive pay, and analyze if the impact of different nature of the reports on the pay levels, the pay gap and the performance of the compensation performance sensitivity is consistent. Through the collation of relevant literature, we can know that our country about the media attention and executive pay, mainly focus on the corporate governance role of media, but ignored the relationship between the media attention and executive pay. At the same time, the measurement of the media attention, it is only selected the number of media reports, ignored the role of media reports play a role in the supervision and governance.Based on this, this paper do further studies on the influence of media on executive pay based on reviewing the agent theory, human capital theory, information asymmetry theory, theory of reputation mechanism, Using samples which are coverage of executive compensation data of A-share listed companies by manual collection during 2009-2014, using descriptive statistics analysis, correlation analysis and multiple regression analysis and other methods to study the different characteristics of the reports on executive pay levels, pay gap and the pay performance sensitivity. The empirical results show that media coverage of executive pay will reduce executive pay levels. Specifically speaking, the higher the attention of the media, the greater the degree of executive pay relatively decline compared with last year. Compared to the non-state-owned holding listed companies, media’s negative reports will make the state holding listed company executive pay levels drop more; Relative to the media attention, the media’s negative reports is more significant on executive pay and pay gap, that is to say, media’s negative reports are more likely to reduce the pay gap between executives and ordinary workers and improve the fairness. In this paper, the research of the selected samples, listed companies have a relatively large size, so executive pay performance sensitivity is higher also, whether to join the media attention or negative media reports did not improve the pay performance sensitivity. Combined with the empirical analysis conclusion, this paper respectively from the government, the listed company and media itself puts forward relevant policy suggestions.