Public governance and executive perks under a weak corporate governance environment

We reveal state-led anti-corruption campaigns in China can mitigate excess executive perk consumption facilitated by firms' weak internal control environment. Our findings suggest that public governance can substitute for firm-level governance mechanisms. Since these campaigns enhance the central government's disciplinary power over local state-owned enterprises (SOEs), the above effects are heightened among SOEs controlled by provincial/municipal governments rather than the central government. Irrespective of political connections, non-SOEs are also affected, indicating policy effect spillover to China's private sectors. We explore several underlining mechanisms for these effects, including Communist Party Committee governance, chief executive officer/chairperson dismissal, industry competition, and firm productivity.