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Board Business Connections and Firm Profitability: Evidence from China

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  • Yu Liu
  • Feixue Xie
  • Zhenning Xu

Abstract

Using a unique dataset on board directors from 2008 to 2016, we document a positive relationship between board business connections and firm profitability for listed firms in China. The positive relationship is robust to various estimation methods and is stronger when the connections are possessed by independent directors or extended to listed firms. Finally, well-connected firms are more likely to have access to external financing and to obtain favorable audit opinions. Overall, our findings signify the importance of connections (guanxi) in business activities in China.

Suggested Citation

  • Yu Liu & Feixue Xie & Zhenning Xu, 2019. "Board Business Connections and Firm Profitability: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(9), pages 1954-1968, July.
    • Handle: RePEc:mes:emfitr:v:55:y:2019:i:9:p:1954-1968
    DOI: 10.1080/1540496X.2018.1498332
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    Cited by:

    1. Liu, Yu, 2020. "The comparative and interactive effects of political, academic and financial directors," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 546-565.

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