Beyond agency costs: executive perks as incentives for informative MD&A tone in China
研究中国上市公司高管在职消费如何影响管理层讨论与分析（MD&A）语调，发现在职消费促使经理人提供更乐观且信息含量更高的披露，而非传统认为的代理成本。
Purpose This study aims to investigate how executive perks influence the tone of management’s discussion and analysis (MD&A) disclosures in Chinese listed firms. It challenges the conventional view of perks as mere agency costs by examining whether these non-monetary benefits motivate managers to provide informative and optimistic narrative disclosures. Design/methodology/approach We analyze 29,049 firm-year observations of A-share listed companies in China from 2009 to 2021. MD&A tone is measured using textual analysis based on an adapted Loughran and McDonald (2011) dictionary in Chinese. We employ firm- and year-fixed effects regressions, Heckman selection models, difference-in-differences tests using anti-corruption and Value added Tax reforms and multiple robustness checks with alternative perk and tone measures to validate the results. Findings Executive perks are positively associated with MD&A optimism, particularly in firms with high financial reporting quality or those underperforming analyst forecasts. Abnormal tone linked to perks predicts superior future earnings performance and lower restatement likelihood, suggesting that perks encourage managers to inform rather than mislead investors. Quasi-natural experiments further confirm a causal link between perk reductions and more conservative disclosure tones. Originality/value The study offers new evidence that perks can align managerial narrative disclosure incentives with shareholder interests in weak information environments, extending the understanding of executive incentives and tone management in emerging markets.