Can media coverage restrain executive empire building and pursuit of a quiet life? Evidence from China

Based on the unique institutional background of China's capital market, we study the effects of media coverage on executive empire building and pursuit of a quiet life among publicly listed firms over the period of 2007-2013. Our results suggest that media coverage and executive empire building and pursuit of a quiet life are positively correlated, particularly for state-owned enterprises (SOEs), which is in contrast to conclusions reached in previous studies. We contend that executive empire building and pursuit of a quiet life are not obvious governance violations in China and that the socially and politically desired governmental goals of job creation and labor harmony contribute to the positive correlation. The particularly strong findings among SOEs relative to non-SOEs corroborate our argument because SOEs typically pursue government-desired social goals. Our findings hold implications for improvement of the corporate governance environment in China and provide a useful perspective for the literature on media coverage.