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The monitoring role of media on executive compensation

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  • Hong Luo
  • Baohua Liu
  • Weiqian Zhang

Abstract

This paper investigates the monitoring role of media on executive compensation. Using data on media coverage from 2007 to 2009, we find that the media can serve as an effective external monitoring mechanism on executive compensation by affecting executive reputation. Specifically, negative media coverage and government intervention on media can enhance the monitoring role of media. We also find that the monitoring role of media and the market reaction to media coverage are stronger for non-state-owned corporations. Although the monitoring role of media is not different between monopolistic and non-monopolistic industries, the market reaction to media coverage is stronger for companies in non-monopolistic industries. We also find that there is less coverage on monopolistic and state-owned companies.

Suggested Citation

  • Hong Luo & Baohua Liu & Weiqian Zhang, 2013. "The monitoring role of media on executive compensation," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 1(2), pages 138-156.
    • Handle: RePEc:taf:rcjaxx:v:1:y:2013:i:2:p:138-156
    DOI: 10.1080/21697221.2013.802974
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