Female Director,Internal Control And Company Litigation

With the continuous progress and development of the society,the organizational form of the enterprise has evolved from a sole proprietorship to a corporate enterprise.The most significant problem in corporate companies is the agency problem caused by the separation of ownership and control.Therefore,the board of directors is particularly important as an internal governance mechanism that controls and supervises the opportunism of managers(Fama and Jensen,1983).On the one hand,the board of directors must fulfill its supervisory duties to corporate executives,and supervise whether corporate executives will infringe on the interests of shareholders because of their own interests;on the other hand,the board of directors also needs to be responsible to shareholders,protect the interests of shareholders,and major matters of the company.Make decisions.Therefore,in the theory of corporate governance,the research on the structure of the board of directors has strong theoretical and practical significance.Gender diversity of the board of directors emphasizes that the individual characteristics of each member of the board of directors have different influences on the behavior choices of board members,and ultimately affect the strategic choices and decisions of the company.The Upper Echelons Theory proposed by Hambrick and Mason argues that executive heterogeneity has an important impact on business.Under the premise of bounded rationality,the age,gender,educational background,tenure,work experience and religious beliefs of board members are a very easy to identify background feature that affects the values,perceptions and risks of board members.Preference,which affects the behavioral choices of board members,and thus has an impact on the company's strategic choices,strategy implementation,and organizational output.(Conyon & Mallin,1997;Daily & Dalton,2003).In recent years,countries such as Norway,Spain and Denmark have introduced policies and regulations to increase the proportion of female directors in the board of directors of enterprises.This has caused the practical and theoretical circles to discuss the importance of the gender of board members in the normal production and operation activities of enterprises..Related studies in behavioral finance indicate that women have lower risk appetite and less willingness to risk than men,and have risk aversion in corporate decision-making and corporate governance.That is to say,in the face of the same environment,male directors have a higher degree of risk appetite and risk tolerance,sothey often take risky and radical strategies to manage the production and operation of enterprises,while female directors are cautious because of their own Sexuality and risk aversion characteristics are more likely to use a relatively conservative and robust strategy to manage a company's production operations(Zhang et al.,2013;Barber and Odeam,2001).This is particularly significant in corporate financial decisions and in the face of major uncertainties(Powell and Ansic,1997;Zhu Jigao,2012).Therefore,a large number of literatures analyze and test the impact of gender diversity of board members on firm performance from the perspective of prudence and risk aversion.Some studies have found that female directors are significantly positively correlated with the company's performance level and current ROE on the gender-diversified board(Ross,2007;Li Jiangyan et al.,2014),which is significantly negatively correlated with the company's over-investment.Following the high level,2010),it is believed that female directors will help to enhance the company's value.Other studies have found that risk aversion has significantly reduced the risk of corporate directors(Faccio et al.,2015),and the market has negatively rated the company's appointment of female CEOs(James,2007),and the presence of female directors will Suppressing the structural checks and balances of the board of directors(Zainaletal,2013;Abdullah,2013),which suggests that female directors have a significant negative impact on company value.It can be seen that the conclusions of the research on the economic consequences of gender diversity in the board of directors are far from being agreed.Moreover,the existing literature focuses on the analysis of gender diversity in the board of directors,especially the impact of the proportion of female directors on business performance.Scholars are still less concerned about the specific mechanisms by which female directors influence corporate performance.Based on this,this paper intends to analyze the economic consequences of gender diversity of the board of directors from the perspective of corporate litigation.Specifically,the main research questions include:First,is there a significant negative correlation between female directors and corporate litigation? Second,if a female director is significantly negatively related to a company lawsuit,what is the specific mechanism behind it? Third,is there a significant difference in the relationship between female independent directors,female non-independent directors and corporate litigation? On this basis,the paper will further analyze the interaction between female key positions directors(including the chairman and general manager)on corporate litigation and marketization processes and female directors.Taking the 2003-2015 China Shanghai and Shenzhen Main Board A-share listed companies as research samples,we conducted a more in-depth theoretical analysis and empirical test on the above issues.As a result,it was found that,firstly,the proportion of female directors in the sample companies was significantly negatively correlated with corporate litigation.Second,the proportion of female directors in sample companies is significantly positively correlated with internal control.Third,compared with female non-independent directors,female independent directors have a more significant impact on corporate litigation and internal control.Further test results show that although there are similar relationships with female directors between directors of directorships(including the chairman and general manager)and corporate litigation and internal control,compared with female directors,directors of key positions are The impact of litigation and internal controls is even smaller.In addition,the results of further tests also found that in areas with high marketization,female directors have a more significant impact on corporate litigation,and female non-independent directors are also affected by the marketization process,which has an impact on corporate litigation.On the theoretical level,the research conclusions of this paper not only expand and deepen the research on the diversified economic consequences of the board of directors from the perspective of gender of board members,but also provide a new explanation for the influencing factors of corporate litigation from the perspective of female directors.At the practical level,the above test results prove that female directors can effectively reduce the probability of enterprises being sued,thereby reducing the business risks of enterprises and indirectly promoting the healthy development of capital markets.