IDEAS home Printed from https://ideas.repec.org/a/taf/rcjaxx/v5y2017i3p361-378.html
   My bibliography  Save this article

Chasing political resources by listed companies: a perspective on hiring non-local independent directors from Beijing

Author

Listed:
  • Yi Quan
  • Sihai Li
  • Shangkun Liang

Abstract

Using a sample of Chinese A-share listed companies from 2002 to 2013, we investigate the motivation and consequences of listed companies hiring non-local independent directors from Beijing. The results indicate that: (1) listed companies that are headquartered far away from Beijing, or located in poor institutional environments, are more inclined to hire non-local independent directors from Beijing for the sake of political resources; (2) listed companies not headquartered in Beijing hire a significantly higher ratio of independent directors with full-time jobs in Beijing that are retired government officials than do listed companies located in Beijing; (3) appointing independent directors from Beijing helps enterprises to refinance equity, enter high-barrier industries, and reduce the risk of illegal penalties. Our analysis also reveals that non-local independent directors from Beijing receive higher remuneration. This study clarifies the internal decision mechanisms surrounding independent director appointments and the role they play. Our results reflect the failure of the independent director system as an enforceable institution under a transitional economy and provide important implications to improve our corporate governance mechanisms.

Suggested Citation

  • Yi Quan & Sihai Li & Shangkun Liang, 2017. "Chasing political resources by listed companies: a perspective on hiring non-local independent directors from Beijing," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 5(3), pages 361-378, July.
    • Handle: RePEc:taf:rcjaxx:v:5:y:2017:i:3:p:361-378
    DOI: 10.1080/21697213.2017.1383056
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/21697213.2017.1383056
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/21697213.2017.1383056?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zeng, Yanni & Liu, Mengna & Ding, Ashley & Xu, Rui & Zhang, Hao, 2023. "Cultural similarity of non-local independent directors and financial reporting quality," International Review of Financial Analysis, Elsevier, vol. 90(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rcjaxx:v:5:y:2017:i:3:p:361-378. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rcja .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.