CHINA FINANCIAL RESEARCH NETWORK
2013-11-05 第6卷 第5期
Massey UniversityCollege of Business
University of WollongongSchool of Accounting and Finance
肖 浩 复旦大学管理学院
Jing Liao Massey UniversityCollege of Business
Using a sample of 1250 companies listed in Shanghai or Shenzhen Stock exchanges for the time period from 1999 to 2010, we find that for firms with a higher level of uncertainty, the benefits of the connections and advice provided by directors outweigh the costs of the impairment in decision making related to having a large board size. In particular, the positive incremental effect of board size on Q, for firms with a higher proportion of State shares, suggests that connections provided by directors is crucial for firms to get access to greater resources and it is even more important to Stateowned than to Non-State-owned firms during the economic reform in China. Our results indicate that that both agency theory and resource dependence theory play an important role on board efficient research.
Xiaofei Pan University of WollongongSchool of Accounting and Finance
Using a sample of China’s listed private firms we investigate the relationship between control-ownership wedge, bank connections and collateral requirement. We find that while control-ownership wedge relates to more pledged collateral, it is mainly the firm’s bank connections rather than its political connections that reduce the collateral requirement and weakens the positive relationship between the control-ownership wedge and collateral. We furhter find that the split-share structure reform and regions with high lender competition also require less collateral and weaken the positive relationship between the control-ownership wedge and collateral. We argue that in an emerging market where legal protection for creditors and investors are weak and relationship is prevalent, bank connections is a substitute for collateral through mitigating the information asymmetry and agency concerns by creditors, which has been further exacerbated due to the tunnelling risk by the controlling shareholders.
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