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Are all perks solely perks? Evidence from corporate jets
Journal article   Peer reviewed

Are all perks solely perks? Evidence from corporate jets

Lian Fen Lee, Michelle Lowry and Susan Shu
Journal of corporate finance (Amsterdam, Netherlands), v 48, pp 460-473
01 Feb 2018
DOI: https://doi.org/10.1016/j.jcorpfin.2017.11.014

Abstract

Business & Economics Business, Finance Social Sciences
While shareholders have strong incentives to limit value-destroying perquisite consumption, it is challenging to identify such perquisites. Many corporate assets that enable forms of perquisite consumption also provide operational benefits. Corporate jets represent a potent example. We find business-related flights increase firm performance. Our results also highlight the channels through which jet use can either enhance or destroy firm value. Consistent with the benefits of information gathering and monitoring, firms with soft and complex information that is difficult to transmit remotely are more likely to fly to company subsidiaries and plants, and these flights positively affect firm value. In contrast, among firms with weak governance structures where flights are more likely motivated by agency factors, jet use is more likely to be value-decreasing. The ability to differentiate has important implications in today's activism environment. (C) 2017 Published by Elsevier B.V.

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19 citations in Web of Science
16 citations in Scopus

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Collaboration types
Domestic collaboration
Web of Science research areas
Business, Finance
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