Reaearch On The Influence Mechanism Of Directors' Diversified Professional Backgrounds On Corporate Financial Irregularities From The Prospective Of Major Shareholder Governance

China is in the process of transformation and development with a high level of information asymmetry,and thus frequent cases of financial irregularities in listed companies,which not only greatly damage the legitimate interests of small and medium-sized investors,but also seriously damage the credibility foundation of the capital market.Among the process in decreasing financial irregularities,the perfect internal governance mechanism of corporates is the fundermental factor.As the core part of the internal governance mechanism,the board can play the role of corporate governance effect.However,different from other kinds of corpotate irregularities,financial irregularities are more complicated and secret.The diversity of directors on board can reduce the cognitive limitation of the board by decreasing individual bounded rationality,thus improving the corporate governance effect of the board.Therefore,the concept of "the diversity of the board of directors" was also put forward for the first time in the revision of Chinese Listed Corporate Governance Code by China Securities Regulatory Commission in 2018.Based on the perspective of organizations,most existing studies on the influence of diversity of directors find that diversity of directors can play positive corporate governance effect,whereas other studies believe that diversity of directors inceases communication cost of the board.Existing related studies have not reached a consistent conclusion on the impact of the diversity of directors from the organizational level(different characteristics individuals within the organization),and even lacked in-depth analysis on the impact of the diversity of directors' characteristics on the financial irregularities based on the individual level(individuals themselves possessing diversified characteristics).The ownership structure of Chinese listed companies tends to be concentrated,and the influence of major shareholder governance cannot be ignored.After the Split Share Structure Reform,the increase of stock liquidity promotes the major shareholders to play a positive role in corporate governance.Among them,as the majority shareholder with the actual control of the listed company,appointing directors is an important way to participate in corporate governance,which will influence the impact of directors with diversified professional backgrounds on financial irregularities.Therefore,the influncing path and effect of directors with diversified professional backgrounds on financial irregularities under the governance of controlling major shareholders remain to be further investigated.In addition,as informed traders of the company,the exit of non-controlling major shareholders will send an adverse signal to the market,thus having a negative impact on the stock price.This behavior will directly damage the interests of the controlling major shareholders who hold the most of company shares and form a potential exit threat.Therefore,non-controlling major shareholders may further affect the governance effect of controlling major shareholders by threatening controlling major shareholders and managers to sell their shares to participate in corporate governance.However,existing related studies lacks of considering the heterogeneity among major shareholders,ignoring differences of intrinsic motivation and effect between non-controlling major shareholders and non-controlling major shareholders in corporate governance Moreover,few studies analysize influence mechanism of directors with diversified professional backgrounds on financial irregularities under the joint governance of major shareholders based on exit threat of non-controlling large shareholders.Above all,based on the individual level,this dissertation carries out the research on the influence of diversified professional backgrounds of directors on corporates financial irregularities.In addition,the ownership structure of Chinese listed corporates tends to be concentrated,and the major shareholders are the root of the differences between Chinese and western corporate governance structures.Among them,the controlling major shareholder is the major shareholder with the actual control right of the listed corporate,and appointing directors is an important way for them to participate in corporate governance,which will affect the impact of diversified professional background of directors on corporate financial irregularities.Meanwhile,as the informed trader of the corporate,the exit of non-controlling major shareholders will send bad signals to capital market,directly damage the equity returns of the controlling major shareholders.The potential exit threat forms a constraint on the controlling major shareholder,which will further affects the effect of controlling major shareholders'participation in corporate governance.Above all,based on the information asymmetry theory,principal-agent theory,resource dependence theory and social identity theory,the dissertation examines the impact of directors with diversified professional backgrounds on corporate financial irregularities from three dimensions including behavior tendency,severity and complexity.Furthermore,the dissertation distinguishes the heterogeneity of major shareholders,and investigate its motivation,influence path and mechanism under the governance of major shareholders.The study hopes to provide a new perspective for the diversity of the board of directors in corporate governance,provide theoretical basis for clarifying the governance motivation and action path of major shareholders,and provide practical reference for improving the governance structure of Chinese corporates.The main research results of this dissertation are as follows:(1)Directors with diversified professional backgrounds can not only increase the degree of board diversity,but also avoid the communication costs of board diversity which is composed of directors with different professional backgrounds.The increase of the proportion of directors with diversified professional backgrounds significantly reduces the tendency,severity and complexity of corporate financial irregularities.Different from the previous researches which focus on the impact of board diversity based on the organizational level,this dissertation constructs the influence model of the impact of directors' diversified professional backgrounds on the corporate financial irregularities from the aspects of the behavior tendency,severity and complexity of the corporate financial irregularities based on the individual level of directors.In addition,the dissertation also constructs the moderating effect model of "other heterogeneous characteristics of directors--diversified professional background of directors--corporate financial irregularities",and further examines the internal mechanism of directors with diversified professional backgrounds on reducing corporate financial irregularities.We find that the directors with diversified professional backgrounds are effective in reducing the tendency,severity and complexity of corporate financial irregularities,while directors with simple professional background are not.With the increase of the proportion of directors with diversified professional backgrounds,the supervisory and advisory roles of the board of directors increase,and the behavioral tendency,severity and complexity of corporate financial irregularities also decrease significantly.Furthermore,from the perspective of human capital,social capital and functional role of directors,this dissertation considers the moderating role of other characteristics of directors in the relationship between diversified professional backgrounds of directors and corporate financial irregularities.We find that the female characteristics can promote the diversified professional backgrounds to better reduce corporate financial irregularities,while the foreign backgrounds in developed countries cannot.Chain relationship expands information transmission and resource connection,which can help directors with diversified professional backgrounds better reduce corporate financial irregularities.The role of the internal audit committee provides the implementation path for the directors with diversified professional backgrounds to supervise and restrain corporate financial irregularities.(2)Through appointing directors with diversified professional backgrounds to participate in corporate governance,the controlling major shareholder can promote information transmission and resource connection between the corporate and the outside,thus significantly reducing the tendency,severity and complexity of corporate financial irregularities,which means the controlling major shareholder plays a positive effect in corporate governance.From the perspective of appointing directors,this dissertation incorporates the controlling major shareholders governance into the analysis framework of the effect of directors with diversified professional backgrounds on corporate financial irregularities.Accordingly,the dissertation constructs the mediation effect model of controlling major shareholders'participation in corporate governance to reduce the corporate financial irregularities from information transmission and resource connection.We find that the controlling major shareholder can effectively reduce corporate financial irregularities by appointing directors with diversified professional backgrounds.When further analyzing the influencing path of controlling major shareholders in corporate governance,we find that the directors which are oppointed by the controlling major shareholder promote information transmission and resource connection between the corporate and the outside,thus significantly reducing the tendency,severity and complexity of corporate financial irregularities.The results indicate that under the governance of the controlling major shareholder,directors with diversified professional backgrounds can not only directly reduce corporate financial irregularities,but also indirectly reduce corporate financial irregularities through improving analyst tracking and reducing the dependence of external financing,which plays a partial mediating effect.(3)The exit threat of non-controlling major shareholders significantly influences the behaviors of managers and the controlling major shareholder,and thus futher improves the effect of director with diversified professional backgrounds on corporate financial irregularities.The wealth sensitivity of the controlling major shareholder and exit credibility of the non-controlling major shareholders are important conditions to exert positive governance effect of non-controlling major shareholders.From the perspective of exit threat,the dissertation further incorporates the non-controlling major shareholders governance into the analysis framework of the controlling major shareholder's governance,and construct the moderating effect model of "exit threat of non-controlling major shareholders-the controlling major shareholder appointing directors-corporate financial irregularities".Besides,the dissertation examines the motivation,mechanism and effect of non-controlling major shareholders governance.We find that the exit threat of non-controlling major shareholders reduces the managers' opportunism motivation and improves the controlling major shareholder' positive gavornance motivation,and thus improves the effect of the directors with diversified professional backgrounds on tendency,severity and complexity of corporate financial irregularities.When further analyzing the influence mechanism of exit threat of non-controlling major shareholders,we finds that the wealth sensitivity of the controlling major shareholders and the exit credibility of the non-controlling major shareholders are the guarantees for the non-controlling major shareholders to play a significant positive governance effect.