Politically Connected Boards, Value or Cost: Evidence from a Natural Experiment in China

Han, Jianlei; Zhang, Guangli

doi:10.2139/ssrn.2635741

Cited by 8 publications

(14 citation statements)

References 10 publications

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“…The median score for the number of board meetings is 8 with companies above (below) the median coded as 1 (0) (Kent and Stewart, ; Abeysekera, ; Gray and Nowland, ; Kent and Zunker, ). Companies with a majority of independent directors are coded as 1 and alternatively 0 without a majority (Hillier and McColgan, ; Xu et al ., ; Han and Zhang, ; Hollindale et al ., ). Lastly, a dichotomous variable is used for audit committee, taking a value of 1 if companies have an audit committee in operation and 0 otherwise (Chen et al ., ; Baxter and Cotter, ; Contessotto and Moroney, ).…”

Section: Methodsmentioning

confidence: 99%

The importance of cash flow disclosure and cost of capital

Kent

2018

Accounting & Finance

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We examine whether the choice of cash flow disclosure under International Accounting Standard 7 has an influence on the cost of capital incurred by Australian listed companies. Results indicate that indirect method companies incur a significantly higher ex-ante cost of equity than direct method companies using a combined equity model approach. We also demonstrate that using an optimal weighted combination of equity models reduces model variance and bias compared to using a single equity model. Our findings support mandating the direct method and have the potential to induce companies to report the direct method to increase company value.

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Section: Methodsmentioning

confidence: 99%

The importance of cash flow disclosure and cost of capital

Kent

2018

Accounting & Finance

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“…Han et al . () find that stocks of firms with politically connected directors who are targeted by the regulatory change show on average a significantly positive abnormal return, and suggests that the agency cost effect of a politically connected director dominates the value effect. Faccio et al .…”

Section: Literature Reviewmentioning

confidence: 98%

Politically connected independent directors and corporate fraud in China

Kong

Xiang

Zhang

et al. 2019

Accounting & Finance

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This study investigates the effect of politically connected independent directors on a firm's likelihood of committing fraud in China. We classify the political backgrounds of independent directors into three categories based on their employment histories: local background, central background, and local and central background. Using corporate fraud data from 2000 to 2014, we find that independent directors with local political backgrounds significantly reduce the likelihood of a firm committing fraud. Further analysis shows that locally connected independent directors are more likely to have both employment experience in regulatory agencies and financial/accounting/law expertise.

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“…Political connections are important in any country but especially so in a rapidly emerging market such as China's. Research in this area includes the pros and cons of politically connected boards (Han and Zhang, ), the effect of politically connected boards on auditor choice and accounting disclosure (Liu et al ., ), and politically connected boards and credit financing (Peng et al ., ).…”

Section: Output–expert Judgementmentioning

confidence: 99%

Machine Learning and Expert Judgement: Analyzing Emerging Topics in Accounting and Finance Research in the Asia–Pacific

Cai

Linnenluecke

Marrone

et al. 2019

Abacus

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In this paper, we focus on the question to what extent machine learning (ML) tools can be used to support systematic literature reviews. We apply a ML approach for topic detection to analyze emerging topics in the literature-our context is accounting and finance research in the Asia-Pacific region. To evaluate the robustness of the approach, we compare findings from the automated ML approach with the results from a manual analysis of the literature. The automated approach uses a keyword algorithm detection mechanism whereby the manual analysis uses common techniques for qualitative data analysis, that is, triangulation between researchers (expert judgement). From our paper, we conclude that both methods have strengths and weaknesses. The automated analysis works well for large corpora of text and provides a very standardized and non-biased way of analyzing the literature. However, the human researcher is potentially better equipped to evaluate current issues and future trends in the literature. Overall, the best results might be achieved when a variety of tools are used together.

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Politically Connected Boards, Value or Cost: Evidence from a Natural Experiment in China

Cited by 8 publications

References 10 publications

The importance of cash flow disclosure and cost of capital

The importance of cash flow disclosure and cost of capital

Politically connected independent directors and corporate fraud in China

Machine Learning and Expert Judgement: Analyzing Emerging Topics in Accounting and Finance Research in the Asia–Pacific

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