A Study On The Impact Of Interlocking Directorates On Thevalue Of Listing Corporations In Financial Industry In China

As the sustainable development of the socialist market economy in China, interlocking directorates has become a universal phenomenon in corporate governance, and has a profound impact on China’s corporate governance. The purpose of this paper is to find the affect that the interlocking directors have on the value of listed companies in China’s financial industry through empirical research, analyze the results, and put forward countermeasures to promote the development of interlocking directors to improve corporate governance effectiveness in China’s financial industry, enhance the corporate value according that. For the characteristics of the study, the paper uses research methods of browsing materials, combining qualitative and quantitative, combining empirical study and normative study, combining static and dynamic research study.Firstly, the article defined concept of the interlocking director and company value clearly, and defined the range of listed companies in financial industry, and introduced the theories of the interlocking directors and the value of companies.Secondly, introduced the current situation of listed companies in China’s financial industry, had a preliminary statistical analysis of the chain directors and the value of companies of listed companies in China’s financial industry by selecting the data in 2009-2013 as a sample.Thirdly, had an empirical analysis of the relationship between interlocking directorates and the value of companies by selecting the data in2003-2013 as a sample. The empirical results show that: in the listed companies in China’s financial industry, the number of interlocking links formed by the interlocking directors working in multiply corporates has a negative impact on the companies’ value. The quality of interlocking links has a negative impact on corporate value, the dynamic change of the quantity and quality of interlocking links and the corporate value are in the opposite direction. And we analyzed the empirical results, the conclusions are: the theory of management control, the theory of career advance and so on, are more suitable to explain the phenomenon of interlocking directorates in China’s financial industry.Finally, based on the empirical results, proposed countermeasures about improving management of interlocking directors and promote the interlocking directors to play an active role in improving governance and enhancing corporate value of listed companies in China’s financial industry.