The Impact Of Analyst Coverage On Executive Perks

In recent years,the phenomenon which the executives of listed companies in our country have astronomical salaried and astronomical perks occurred frequently,and it has caused extensive concern of media and the public.Executives' perks are indirect monetary gains the executives acquired which are relevant or irrelevant to their duties and responsibilities during their performance.Perks include consumption in luxury offices,special planes,luxury catering and entertainment consumption,and aircraft first class,etc.Based on principal-agent theory,perks is regarded as a part of the company's agency costs,which will damage the interests of business owners and reduce the efficiency of the company.Now most researches on perks mainly focuses on how to restrain the perks from the perspective of internal corporate governance.However,for the country at the stage of transitional development,perks is not only related to internal corporate governance,but also related to external market environment,especially the impact of the capital market.From the early 1990s to the present,Chinese capital market has developed rapidly from scratch.As an information intermediary of the capital market,securities analysts are also making important influence on the daily operations and management of listed companies while assisting investors in decision-making.Does the coverage of securities analysts have an impact on executives' perks?This article is the beginning of exploration with this question.After analyzing and summarizing a large number of relevant researches,this paper believes that the coverage of securities analysts may have two opposite effects on the executives' perks of listed company executives.On the one hand,the coverage of analysts can inhibit the perks.The report released by analysts can increase the transparency of listed company information,and thus inhibit the perks,which is the "Supervisory Effect".On the other hand,in the context of China's overall bullish market,the coverage of analysts is recognition of their performance,it can motivate them to seek more consumption,which is the "Incentive Effect".Therefore,this article selects A-share listed companies from 2010 to 2014 as a research sample,and examines the impact of analysts coverage on the executive perks in China.The study found that:First,in China,whether it is state-owned enterprises or private enterprises,the executives of listed companies generally have a high amount of perks.Second,the more coverage from analysts,the more perks of listed company executives,that is,"Incentive Effect".Third,the negative analyst coverage also shows significant incentive effect.This is mainly due to:on the one hand,the generally bullish market environment weakens the supervisory effect of a small number of analyst negative coverage.On the other hand,the companies which are filtered out by the negative analyst coverage are rare "bad companies" on the market,and their executives will have a tendency to decline and to seek more perks to maximize personal utility.The main innovation of this paper is that this paper introduces the coverage of securities analysts into the study of executive perks.It has also broadened our understanding of the causes and changes in the executive perks,and has played a positive role in the promotion of corporate governance and the improvement of the capital market system of china in the future.