Study On The Relationship Between The Resignation Of Politically Connected Independent Directors And Credit Financing Ability

At the end of the 20 th century,in order to strengthen the supervisory role of the board of directors and protect the interests of minority shareholders,China began to introduce the independent director system.However,in reality,independent directors do not perform the supervision function well,but play the role of decision-making consultation and resource support to a large extent.Under the special national conditions of our country,the government has a great influence on the allocation of resources,and hiring independent directors with official background is helpful to establish the connection between enterprises and the government,so that becomes an important way for enterprises to obtain resources.Although politically connected independent directors can help enterprises to obtain some "critical resources" to a certain extent,they also undermine the fair competition mechanism of the market.In recent years,with the continuous improvement of the independent director system,China has issued relevant policies to restrict officials from serving as independent directors.On October 19,2013,the central organization department issued "about further standardize party and government leading cadres(for)the opinions of the issue of part-time work in a enterprise"(referred to as the "no.18").The promulgation of Circular No.18 caused a “departure tide” for independent directors of political connections,thus providing a new perspective for studying the influence of political association of independent directors on enterprises.A large number of literatures try to explain the mechanism of action of politically connected independent directors on enterprises from different perspectives,but few studies focus on the relationship between resignation of politically connected independent directors and enterprises' credit financing ability.Whether the loss of political relations caused by the resignation of independent directors aggravates the problem of "financing difficulty" of enterprises,and how to reduce the negative impact of the resignation of independent directors with political connections on enterprises,these problems need to be further studied and analyzed.On the basis of combing and summarizing the existing scholars' research on political connection and corporate credit financing,based on the theoretical basis of corporate credit financing and the institutional background of corporate governance,this paper attempts to analyze the impact of politically related independent directors' turnover on corporate credit financing from a theoretical perspective.The theoretical mechanism and explore the possible differences in the nature of different property rights;Considering the sensitivity of corporate credit financing to China's institutional environment,this study further investigated the mechanism of institutional environment's influence on the relationship between the resignation of politically connected independent directors and credit financing.In the current research on the institutional environment,scholars often only focus on the impact of formal institutions,but ignore the role of informal institutions;Therefore,this paper respectively studied the influence mechanism of the formal institutional environment represented by marketization index and the informal institutional environment represented by social trust on the above relationship,and combined with the quarterly data of the resignation of politically connected independent directors of China's listed companies from 2013 to 2016,conducted an empirical test on the above theoretical analysis.The research results show that the resignation of politically connected independent directors has a negative impact on the enterprise's credit financing ability,which is mainly reflected in the shortening of financing term and the reduction of financing scale,especially among non-state-owned enterprises.However,the degree of marketization and the level of social trust have a positive regulating effect on the decline of credit financing ability caused by the resignation of politically connected independent directors,that is,the higher the degree of marketization and the level of social trust,the smaller the negative impact of the resignation of politically connected independent directors on the credit financing ability of enterprises.The results of the robustness test also support the above conclusions.The innovation points of this paper are as follows:(1)from the resignation of politically connected independent directors,politically connected independent directors have been verified to a certain extent to improve the credit financing ability of enterprises;(2)the effect of the institutional environment is investigated from the perspectives of marketization degree and social trust.In other words,although the loss of political association of independent directors has a certain negative impact on corporate credit financing,such impact can be alleviated by improving the degree of marketization and the level of social trust.The research in this paper provides empirical basis for China to continuously improve the independent director system,and also provides policy direction for China to solve the problem of "financing difficulties" for enterprises,that is,to continuously improve the socialist market system,improve the level of social trust,and gradually establish a fair market competition environment and a good financing environment.