Monitoring corporate boards: evidence from China

Farag, Hisham and Mallin, Christine (2019) Monitoring corporate boards: evidence from China. European Journal of Finance, 25 (6). pp. 524-549. ISSN 1351-847X

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    Abstract

    China’s listed companies have two-tier boards comprising of a supervisory board and a board of directors. The supervisory board has the responsibility to oversee and monitor the board of directors. Similarly, the role of the independent non-executive directors (INEDs) is to advise and monitor directors. In this paper, we investigate the main board structure hypotheses namely the scope of operations, monitoring and negotiation hypotheses for a sample of Chinese Initial Public Offerings floated on both the Shanghai and Shenzhen stock exchanges. Our results provide evidence to support the three hypotheses. Interestingly, we find that the larger the size of the board of directors, the larger the supervisory board size. Moreover, we find that the higher the proportion of INEDs, the smaller the supervisory board size and this implies that INEDs are perhaps a substituting mechanism for the supervisors’ monitoring role. Finally, we argue that as the Chinese governance structure combines both the German and the Anglo-Saxon models, this creates a conflict between the two boards with respect to the monitoring role. Our results, therefore call for a comprehensive reform in the Chinese governance mechanism.

    Item Type: Article
    Additional Information: Issue: Fifth Conference on the Chinese Capital Markets University of Manitoba, Winnipeg, Canada, 16th and 17th July 2015
    Uncontrolled Keywords: corporate governance,dual board structure,ipos,monitoring boards,economics, econometrics and finance (miscellaneous) ,/dk/atira/pure/subjectarea/asjc/2000/2001
    Faculty \ School: Faculty of Social Sciences > Norwich Business School
    Related URLs:
    Depositing User: LivePure Connector
    Date Deposited: 27 Jun 2018 12:30
    Last Modified: 09 Apr 2019 13:10
    URI: https://ueaeprints.uea.ac.uk/id/eprint/67471
    DOI: 10.1080/1351847X.2017.1369138

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