Research On The Mechanism By Which Independent Director’s Administrative Background Influences Private Listed Company Value

The Private enterprises is an important part of economic development in our country, and the private listed companies is the best, its importance is self-evident. But at present, the development of them is still severely restricted:imperfect corporate governance, serious agency problem, financing difficulties, tax injustice problem and so on. While, our country is in transition, political relations as an informal institution can relieve those problems. By hiring administrative background independent directors, private listed companies can establish political relations. Administrative background of them can also affect its function: the supervision, advising and consulting. As a result, the impact they makes on the private listed companies is large and complex.In order to explore the effectiveness of the administrative background of independent directors and their impact mechanism, being based on the 2009-2015.5 private listing company, this paper takes manual administrative background data of independent directors, whose resignation announcements were open in Shanghai or Shenzhen exchange, as the research sample. This paper adopts the stock abnormal returns of the private listed companies before and after the announcement of resignation by event study method and the market model, using (-109,-10) period for estimation window, using (-1,1), (-2,2), (-5,5) three time periods as the event window. This article further takes all private listed companies from 2009 to 2014 as sample, using multiple linear regression models from three angles to analyze the mechanism by which administrative background of independent directors influences company values:company’s debt financing, tax breaks and R&D intensity.Some results have been found as follows:(1) the administrative background independent director’s resignation announcement will cause negative market reaction. on the whole, they make a positive contribution to the creation of private enterprise value of listed companies;(2) the background of independent directors in the enterprise value creation activities of private listed companies really play "resource support role", also can play its function of advice, but it also brings bad effect: ① Easing the debt financing constraints. By hiring administrative background independent director, enterprises can obtain more bank lending, and lower cost of bank loans; The article also further found that the stronger political relations is, the more the private listed companies will be to get bank loans, the interest rate is also lower; as for the loan period, only when the political relations reach a certain intensity, do they have a promoting effect; ② Reducing comprehensive tax rate. And there is a significant negative correlation relationship between the strength of political relationship and comprehensive tax rate. ③ There is negative relation between the political relations and the intensity of R&D investment in the private listed companies. (3) This article found that the role of independent director administrative background before the policy is bigger.Main contribution is to verify administrative background of independent directors can influence on corporate value, and from the view of resources support and advice consulting role to explore the mechanism by which the independent director’s administrative background influences on value of the enterprise. The results lay theoretical foundation for regulating the appointment of independent directors and the behaviors of government officials and speeding up the transformation of government functions.