Research On Influence Of Board Of Directors Informal Hierarchy On Corporate Governance Efficiency

The Board of Directors plays a core role in connecting the shareholders of a company with its management group.By predominating the decision-making power of company's important events,the board is in the key position in corporate governance.The efficiency and quality of decisions made by the board of directors will surely effect the company's long-term development,so the research of how to improve the board governance level is important for companies to enhance their competitiveness.As for the study of the governance of the board of directors,the previous scholars have provided abundant theoretical reference.The board of directors is a whole team carrying out the supervising and strategic functions seen from the outside,but when we look from the inside,the board of directors is composed of different members.So studying the formal structure of the board of directors separately is not enough,we should focus on the characteristics of membership diversity and heterogeneity as well.Therefore,the research perspectives of the study on the board governance gradually transformed from the initial board of directors whole structure angle to the board members' background and behavior characteristics.While most scholars ignored the imbalance of board members' background,such as reputation,social status,outside directorships.The difference of individual background caused the difference of each member's influence power,resulting in informal hierarchy of the board of directors.In the decision-making process,the director in higher hierarchy with larger authority and influence power,will get the respect and trust from directors in lower hierarchy,which can effectively reduce the unnecessary dispute and communication and helps to improve the decision-making efficiency of board.Based on relevant data of 1038 listed companies in Shanghai and Shenzhen Stock Exchanges in China from the year 2013 to 2015,the study used the software of STATA to carry on the regression analysis.The paper studied the correlation between informal hierarchy strength of the board of directors and corporate governance efficiency,and at the same time joined the board formal structure index as moderator variables,aiming to find out the how he interaction of informal hierarchy and the formal structure affect the corporate governance efficiency.The research results show that the board of directors of informal hierarchy strength has a significant positive impact on corporate governance efficiency;Chairman of the board of directors at the highest level of informal hierarchy will weaken the positive effect of informal hierarchy strength on corporate governance efficiency;The proportion of independent directors on the board of directors of has no significant moderating effect on the informal hierarchy strength and governance efficiency's relationship;board of directors size has a positive moderating effect on the informal hierarchy strength and governance efficiency's relationship.In this paper,the research results of formal board of directors informal hierarchy strength having positive impact on the efficiency of corporate governance provides certain reference value for the board of directors of the listed companies to optimization its governance efficiency from the aspects of formal system and informal communication.