| The Board of Directors is an important part in the governance of listed companies, and if theboard structure is reasonable will have a direct impact on the effect of corporate governance, andthus affect the operations of listed companies, which leads to a serious decline in the listedcompanies’ value and endangers the company’s future development. If the listed companies want toobtain a good stability of the development, specified board structure is one of the essentialconditions. With the social development, interlocking directorates have become a commonphenomenon in the Board of Directors. Hence, chain directorates’ relative research optimizes thestructure of the board of directors of listed companies in China, to improve the effect of corporategovernance, and enhance the increasingly imortant value of listed companies.Firstly, this paper specifies the concept of the chain directors and company value, andintroduces a series of theories on the chain of directors and the company value. Secondly, aftercollecting970sample data from the selected194listed companies during2007-2011, descriptivestatistics and preliminary analysis of the interlocking directorates status quo of China’s listedcompanies are made. Then, randomly selected315sample data from the63listed companies for theempirical analysis of interlocking directorates on firm value. In the aspect of the company valuereferences index selection and evaluation, this paper refers to GTA database classification of theindicators of the company value, from the six areas of profitability, operational capacity,development capacity, solvency, risk levels, cash flow capacity to consider the company value, andselect15indicators for the comprehensive consideration of the company value. Analysis andcalculation of the15indicators were derived by using factor analysis the reaction of comprehensiveindicator of the listed companies’value in China.Finally, total assets, total assets growth and rate ofassets are taken as control variables, the empirical analysis of the interlocking directorates of thecompany value has been made. empirical results show that: in the listed companies in China, thereis a negative correlation between the company value and the number of interlocking directorates;between the chain number of directorates and the company value; between the proportion ofinterlocking directorates and the company value. Positive correlation exists between chain directors’shareholdings and the company value, but not obviously, probably because the directorates have noshares of the company, which causes an impact on the empirical results.Company size is positivelycorrelated with the company value but did not pass the test of significance, and the growth rate of total assets is positively correlated with the company value, asset-liability ratio is negativelycorrelated with the company value. There is no inverted U-shaped relationship betweeninterlocking directorates and the company value, hence the optimal interval of interlockingdirectorates can not be found in the substantial evidence. Finally, based on empirical results thispaper proposes stategies such as the control of the number of the chain directors, the specificationand proportion of the chain directorates to enhance the listed companies’value in China.. |
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