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What Drives Managerial Perks? An Empirical Test of Competing Theoretical Perspectives

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  • Hua Zhang
  • Yuanyang Song

    ()

  • Yuan Ding

    ()

Abstract

What drives managerial perks? The commonly accepted view of perks suggests that they are a misuse of firm resources for managers’ private benefit (cost view), and thus perk consumption is unethical. However, an alternative view argues that perks can motivate managers to work hard and thus add to the value of the firm (incentive view): from this perspective, perk consumption is an ethical form of behavior. The fundamental difference between the two positions has critical implications for practice, and this article tests these competing views to determine the circumstances in which one view dominates the other. Using hand-collected data on perks in Chinese-listed companies, we find strong empirical support for the incentive view, which is more likely to be held in firms with moderate ownership concentration. This article not only contributes to the literature on business ethics, but also has critical implications for managerial incentive practices in emerging economies. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Hua Zhang & Yuanyang Song & Yuan Ding, 2015. "What Drives Managerial Perks? An Empirical Test of Competing Theoretical Perspectives," Journal of Business Ethics, Springer, vol. 132(2), pages 259-275, December.
  • Handle: RePEc:kap:jbuset:v:132:y:2015:i:2:p:259-275
    DOI: 10.1007/s10551-014-2320-7
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    1. repec:eee:jbrese:v:86:y:2018:i:c:p:83-95 is not listed on IDEAS
    2. repec:eee:chieco:v:50:y:2018:i:c:p:240-264 is not listed on IDEAS

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    Keywords

    Perks; Ethics; Agency theory; Incentive; China;

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