Independent Directors Network,Enterprise Non Efficiency Inves-Tment And Idiosyncratic Risk

Unsystematic risk is a core issue of the theory of firms. In recent years, with the Macro-economic downturn, the unsystematic risks of domestic A-share listed companies have been rising and remaining at high level in China stock market. In view of this situation, this paper selects domestic A-share listed companies from2010to2012as research samples, using enterprise financial theory and social network theory, launching from two dimensions of causes (non-efficiency of investment and over investment) and countermeasures (independent director network governance) to study the unsystematic risk. The results of this study indicate that:The corporate inefficient investment or over investment are positively related to enterprises unsystematic risks. That is, the higher the non-efficiency of investment and over investment, the greater unsystematic risks are. Then it verifying the principal-agent failure and some characteristics such as overconfidence of managers lead enterprise to invest inefficiently, and finally transfer to the unsystematic risks of enterprise.Secondly, the independent director network centrality and enterprises of the unsystematic risk is negatively correlated, which provides evidence to support the effectiveness of independent director governance, further indicating that the independent director governance behavior and effect depends to some extent on the network position of independent directors, that is, compared to marginalized independent director, the governance effect of independent director who locates in the centrality of independent board director network, is more obvious.Finally, the independent director network centrality and the enterprises’ non efficiency investment or over investment has no significant relationship, indicating that the effect of independent directors network in alleviating the non efficiency investment or curbing excessive investment is not significant. It also illustrates the complexity of the mechanism that independent directors govern the unsystematic risk.