Are Executives Responsible for the Company Rumours?——Evidence from Executive Compensation and Position
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| Title | Are Executives Responsible for the Company Rumours?——Evidence from Executive Compensation and Position
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| Author | Tang Xuesong and Peng Qing |
| Organization | School of Accounting, Southwestern University of Finance and Economics |
| Email | tangxs@swufe.edu.cn；pengqing_hi@163.com |
| Key Words | With the rapid development of network media, the stock market problem of rumours becomes more serious. As the leading character, how do the listed companies deal with rumours? Are executives responsible for the rumours, and do the governance mechanisms play an effective role? Using the data of listed companies during 2005 to 2014, this study conducts a test to show whether the company rumours have an effect on the executive compensation or Position_N. The study shows that: rumours significantly |
| Abstract | With the rapid development of network media, the stock market problem of rumours becomes more serious. As the leading character, how do the listed companies deal with rumours? Are executives responsible for the rumours, and do the governance mechanisms play an effective role? Using the data of listed companies during 2005 to 2014, this study conducts a test to show whether the company rumours have an effect on the executive compensation or Position_N. The study shows that: rumours significantly reduce the executives’ pay growth and the probability of executives to remain in the Position_N. In further analysis, we find that the link between rumours and the executive pay or Position_N is more pronounced for the high-growth companies. After distinguishing rumours’ nature, we find that executives are mainly responsible for the negative rumours or "out of thin air" false rumours. The results above show that the internal governance mechanisms of listed companies deal with rumours by adjusting the executive compensation or Position_N. |
| Serial Number | WP1213 |
| Time | 2017-08-08 |
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