Social media coverage and perk consumption: Agency view or efficiency view?

We examine the impact of social media coverage on executive perk consumption, and we base the investigation on the agency view and efficiency view. Overall, we document that social media coverage does not have an impact on executive perk consumption. However, after distinguishing the motivations for perk consumption, we find that social media coverage reduces perk consumption in state-owned firms, supporting the agency view. We also find that social media coverage has a positive impact on perk consumption in private firms, which is consistent with the efficiency view. Heterogeneity analysis shows that in the sample of state-owned firms, the negative effect of social media coverage on perk consumption is more significant for firms with poor corporate governance and poor internal control. However, in the sample of private firms, the positive impact of social media coverage on perk consumption is more significant for firms lacking social networks and political connections as well as for high-tech firms. Finally, we show that social media coverage can mitigate the negative impact of perk consumption on firm performance overall. Our research helps to clarify the role of social media in the capital market in the internet era and has implications for dialectical views of perk consumption.