Director Networks And Corporate Investment Behaviors:Mechanisms Of Influence And Economic Consequences

The twentieth report puts forward new requirements for China’s economic growth,shifting from a focus on "quantity" to the enhancement of "quality" and emphasizing the improvement of the efficiency of total factor investment.As an important unit of the market economy,enterprises,in addition to capital investment for expanding reproduction and innovation investment for high development quality,also include strategic investment for optimizing resource allocation.The level of its investment efficiency directly affects the overall economic development.In today’s increasingly integrated economic development,enterprises,as individual units in the market,pay more and more attention to the development of external cooperation in order to form a social network,and enhance the efficiency of enterprise investment through the acquisition of information resources and capital resources in the network.Therefore,in corporate governance research,social network theory and analytical methods are more and more widely introduced to explore the interconnections that prevail among firms.The introduction of sociological research methods provides an alternative to traditional corporate governance theories based on networks,power and culture for the study of corporate governance issues.The introduction of the social network paradigm in the field of corporate governance,in particular,examines the information transfer and capital aggregation functions it plays in firm behavior from the perspective of different network relationships.To provide new empirical evidence for social networks as non-institutional complementary governance mechanisms.With economic globalization and changes in the market environment,a director network based on interlocking directors has been formed.However,there is relatively little literature on the relationship between director networks and corporate behavior,and even less on the impact of director networks on corporate investment behavior from the dual perspectives of endogenous dynamics dual innovation and exogenous dynamics mergers and acquisitions that affect corporate investment efficiency.Therefore,based on the new development stage of China’s economy,using the macro social network analysis method,constructing the centrality and structural holes dual measurements to meticulously delineate the internal logic of the director network and the micro investment behavior and economic consequences of the enterprise,which not only enriches the combination of the macro-sociological research methodology and the micro enterprise investment behavior,but also provides support for the director network to play the role of governance mechanism in the emerging capital market to enhance the efficiency of resource allocation,It is also of theoretical value and practical significance to provide support for director networks to play a governance mechanism in the emerging capital market,enhance the efficiency of resource allocation,and realize the high-quality development of Chinese economy.Based on the above background,this study follows the principle of"theoretical foundation-network construction-impact effect-mechanism of action-economic consequences".--The study follows the basic logic of "theoretical foundation-network construction-influence effectmechanism" and takes Chinese A-share listed enterprises from 2010 to 2020 as samples,and conducts theoretical analysis and modeling on the influence of directors’ network on enterprises’ investment behavior based on the theoretical foundations of multidisciplinary cross-fertilization of social network theory,information asymmetry theory,resource dependence theory,and anchoring effect theory.behavior,the theoretical analysis,model construction and data fitting were conducted.The research mainly includes the following four aspects:Firstly,the comprehensive measurement analysis of director network structure dynamics and corporate governance location advantage based on corporate chain trend,ownership geographic differences and network advantage.Pajek is used to construct annual director network centrality and structural hole indicators.And the preliminary analysis of the overall trend of enterprise director network and sample distribution found that:the number and proportion of chain director enterprises show a step-like growth.Through different property rights and geographical chain director enterprises comparative study found that the proportion of chain director enterprises in non-state-owned enterprises and developed regions is higher,but the overall trend is increasing.The domestic director network has not developed to the level of full connectivity,but rather a large grouping element based on a certain core has been formed within the network,while other regions have produced isolated segments of various shapes and sizes.There is a comparative advantage in the network location of enterprises,which can obtain more opportunities for cooperation and mutual benefit and information,capital and other resource support through the director network,to a certain extent,weakening the risk of investment behavior,and then ensure the efficiency of investment.Secondly,based on the double effect of information governance and capital acquisition,the director network influences factors and mechanism research on enterprise investment efficiency.Based on the principal-agent theory,information asymmetry theory and other theoretical analyses and empirical tests found that the director network centrality and structural holes inhibit the enterprise’s inefficient investment at the same time.In terms of the influence mechanism,there are two main paths for the influence of director network on enterprise investment efficiency.One is the information governance effect.The director network reduces the two types of agency and financing constraints due to information asymmetry by acquiring information and capital through network relationships,and promotes the improvement of corporate investment efficiency.Specifically,there are some differences in the form of impact on overinvestment and underinvestment.For overinvestment,mainly through the reduction of two types of agency costs constraints on corporate inefficient investment problems,both defense managers only "performance",build empire and other irrational investment problems,but also to prevent excessive control of large shareholders to form the trench behavior caused by overinvestment;and underinvestment governance is mainly through the prevention of shareholders and managers,and the role of agency problems such as conflict of interest,inadequate incentives.The governance of underinvestment is mainly through the prevention of conflict of interest between shareholders and managers,insufficient incentives and other agency problems leading to manager "laziness".Major shareholders’emptying behavior is not the only reason for underinvestment.Underinvestment may also be related to other factors such as corporate financing constraints.The second is the capital acquisition effect.Director networks can effectively alleviate corporate financing constraints through social capital inputs.The underinvestment caused by the shortage of capital can be effectively solved by seeking more capital injections through the director network.In terms of influencing factors,the higher the degree of marketization,the more significant the director network reduces the inefficient investment of enterprises;compared with state-owned enterprises,the director network in non-state-owned enterprises has a more obvious effect on the supervision and governance of enterprise investment behavior.The stronger the heterogeneity of directors’ occupational backgrounds and the more comprehensive the directors’ occupational backgrounds are,the more the director network can utilize sufficient information discrimination and interpretation ability to avoid investment decision-making errors caused by overly homogeneous occupational backgrounds,and thus enhance investment efficiency.Thirdly,based on the capital acquisition effect,the director network is associated with the dual innovation mechanism of enterprises and the heterogeneity analysis of the degree of marketization,the nature of property rights and financing constraints.Based on the theoretical analysis and empirical test of resource-based theory and principal-agent theory,it is found that the centrality and structural holes of director network effectively promote the dual innovation of enterprises.Firms with strong director network centrality gather more homogeneous resources,leading to a greater tendency towards developmental innovation;while structural holes in the director network help firms gather more heterogeneous resources,providing resource dependence for exploratory innovation.Regarding the influence mechanism,based on the capital acquisition effect of director network,director network promotes firms’ dual innovation by integrating resource redundancy.Specifically,director network centrality promotes exploitative innovation through integrating resource redundancy,while director network structural holes promote exploratory innovation through integrating resource redundancy.Regarding the influencing factors,the moderating effect of directors’network on firms’ dual innovation is stronger in regions with a high degree of marketization and in non-state-owned enterprises.The more severe the degree of financing constraints,the more firms need to coordinate external resources to meet the needs of dual innovation through the non-institutional supplement of director network.The director network becomes a key way for firms to acquire resources for dual innovation.Fourthly,based on the information governance effect of corporate directors’ network on M&A performance association mechanism and the heterogeneity analysis of marketization,property rights nature and environmental uncertainty.Based on theoretical analysis and empirical tests such as anchoring effect theory and prospect theory,it is found that the degree of centrality and structural holes of corporate directors’network jointly affect the M&A performance of enterprises.Specifically,the higher the centrality of the director network,the more significant the positive impact on the short-term M&A performance,while the rich structural holes of the enterprise on the long-term M&A performance to promote the role of obvious.In terms of the influence mechanism,based on the information governance effect of director network,director network enhances M&A performance by controlling the M&A premium.In terms of influencing factors,the higher the marketization process,the stronger the director network promotes corporate M&A performance.The higher the order and transparency of the market,the less the enterprises are interfered by the government,which is conducive to the pursuit of the director network to enhance the M&A performance of enterprises and the play of their own resource advantages;on the contrary,the promotional role of the director network as an informal institutional arrangement is weakened.In the M&A behavior of state-owned enterprises,the political intervention weakens the voice of directors and hinders the full play of their information transfer function.The higher the environmental uncertainty,the stronger the facilitating effect of directors’ network on firms’ M&A performance.That is to say,in order to achieve better M&A performance,enterprises need to obtain more comprehensive information resource transmission advantages based on the director network,so as to realize the value of the network to dig deeper and extend.The above core content is refined layer by layer,which innovatively puts the micro-investment behavior of enterprises into the research framework of multi-factor director network governance,constituting a systematic research vein of director network and enterprise investment behavior:influence mechanism and economic consequences.Some innovative results have been achieved,which are mainly reflected in the following four aspects:Firstly,it argues the multiple factors affecting corporate governance of enterprises,constructs a multifactor network governance model,empirically examines and completes the functional reconstruction and theoretical expansion of the director network as a supplement to the formal and informal institutional arrangements in the multidimensional corporate governance architecture.It improves the existing research paradigm of unidimensional exploration of directors’ corporate governance,and develops research from the economic attributes of traditional corporate governance subjects to the social attributes of multi-factor network governance,forming a complete governance logic that takes into account both formal institutional arrangements and informal institutional supplements,and bridging the theoretical gap of insufficient attention to the functions of directors’ network based on"informal institutions" such as information governance and access to capital.It makes up for the theoretical gap of insufficient attention to the functions of the director network based on information governance and access to capital,and is a useful supplement to the corporate governance mechanism.Secondly,we have constructed a quantitative description of corporate investment behavior with dual indicators of director network centrality and structural holes under the integration of macro-sociological research and micro-corporate behavior.The measurement of director network governance mechanism is improved to study its impact on corporate investment behavior from the perspective of director network as a whole.There are some innovations in the research methodology and the design of metrics.Thirdly,we expand the research boundaries of director networks’participation in corporate governance,and deepen the two governance mechanisms of information governance and capital acquisition of director networks’ impact on investment efficiency.It is found that the capital acquisition effect and information governance effect played by resource redundancy and M&A premium in the director network on corporate dual innovation and corporate M&A performance respectively are also marginal contributions to the research on director network and corporate investment behavior,which deepens and complements the research on the mechanism of action and economic consequences of director network and corporate investment behavior.Fourthly,the driving role of director network governance mechanism on corporate innovation and economic high-quality development in emerging capital markets is explored,providing new evidence in theory and practice for regulation making and policy supervision,which is a useful complement to the role of social networks as a corporate governance mechanism in emerging capital markets.It provides new ways for enterprises to cultivate an innovative environment,stimulate M&A dynamics,and enhance investment efficiency.In summary,this study is based on multidisciplinary cross-theoretical,in-depth analysis of the role mechanism and economic consequences of the influence of director networks on corporate investment behavior.At the theoretical level,it breaks through the traditional analysis framework of corporate governance,introduces the social network perspective,expands the research on the factors influencing corporate investment behavior from the level of social attributes of directors’ network,and constructs the dual indicators of directors’ network centrality and structural holes as well as the multifactorial network governance model,which provides a new perspective and methodology for quantitative network governance.At the practical level,it provides empirical support and strategic guidance for policy formulation and scientific supervision by regulators in the emerging capital market.It provides new ideas for enterprises to implement the innovation-driven strategy,optimize the efficiency of resource allocation and achieve high-quality economic development.