Productivity Behind Consumption: The Impact of Executive Perk Consumption on Firm-Level Total Factor Productivity

As a crucial link connecting executive behavior and corporate resource utilization in corporate governance, the impact of perk consumption on firm-level total factor productivity (TFP) remains to be systematically elucidated. Our study combines the efficiency and agency perspectives on perk consumption, and employs a panel data set of Chinese A-share listed firms from 2010 to 2023 to explore how perk consumption affects firm-level TFP. The results document a nonlinear, inverted U-shaped association, whereby firm-level TFP increases at lower levels of perk consumption but declines once perk consumption exceeds a certain threshold. We further show that investment efficiency and innovation efficiency serve as important mediating mechanisms in this relationship. Our results also suggest that perk consumption more significantly affects firm-level TFP in firms with low ownership concentration, firms without managerial overconfidence, labor-intensive and technology-intensive firms, and firms with low financing constraints. Our study provides empirical support and theoretical insights for optimizing corporate governance structures, regulating senior executive consumption behavior, and improving the efficiency of corporate resource utilization.