Independent Director Networks and Executive Perquisite Consumption——“Collusion” or “Coordination” in Governance?

Liu, Yuwei; Ma, Shiguang; Tang, Xuesong

doi:10.1080/1540496x.2022.2072202

Cited by 3 publications

(1 citation statement)

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“…While serving on multiple boards increases the likelihood that independent directors provide information and resources to the company, the opposing views argue that it can also divert their efforts and reduce the efficiency of monitoring ( Core et al, 1999 ; Falato et al, 2014 ; Liu et al, 2022 ). For example, Fich and Shivdasani (2006) provided evidence that independent directors were busy due to multiple directorships and that the companies they serve exhibit lower profitability.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

How does independent director affect tunneling?—Evidence from social networks

2022

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Given the influence of controlling shareholders on the company, it is important to analyze how independent directors can protect minority shareholders’ interests using the information and resources obtained from social networks. This paper studies the impact of director networks on controlling shareholders’ tunneling behavior in China over the period 2002–2020. Using social network analysis, this paper finds that controlling shareholders’ appropriation to minority shareholders is mitigated in companies with well-connected independent directors. These results remain consistent after a series of robustness and endogeneity tests. This study also reveals that internal controls play a mediating role between director networks and tunneling behavior. In addition, the study indicates that the restraining effect of director networks on controlling shareholders’ tunneling behavior is more pronounced in companies with weaker audit monitoring and poorer transparency. In conclusion, the results reveal that well-connected independent directors play an important role in protecting minority shareholders’ interests.

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Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%