Case Study On The Influence Of The Top Management's Supply Chain Experience On Corporate Value

As we all know,China is a human relationship society,where people are present,human relations are present.As an important informal system,interpersonal relationship plays an active role in China's transition economy with imperfect system and immature market.In fact,senior managers' upstream and downstream work experience is not only a network of relationships,but also a channel of information,and a community of interests.The supply chain experience of senior managers helps to gain the trust of upstream and downstream enterprises and become "insiders" of supply chain,thus affecting the competitive pattern of enterprises.Based on the theory of social capital,this paper studies the impacts of the chairman's supply chain experience on corporate value.Taking Shenzhen Ye from the real estate industry as a typical case study,the research found out that Li Yongming,the second chairman of Shenzhen Ye,with a long working experience in the real estate industry,at his early stage of chairman,his achievement of corporate assets,operating profit,market value and financial value,is higher than the first chairman.It is initially confirmed that the chairman's supply chain experience has an positive effect on the value of the company.Considering the impact of industry factors on corporate value,this paper had eliminated the average performance of the real estate industry and discovered that the effect of the chairman's supply chain on improving corporate performance is still significant.At the same time,taking into account of the impact from regional factors on corporate value,this paper has selected corporations that have chairmen who are lack of experience in the supply chain industry,but from the same industry,have similar scale,and are registered at the same place as Shenzhen Ye,as its reference sample.Further research discovered that when facing the same policy adjustments and market shocks,Shenzheng Ye's corporate market value and financial value are significantly higher than those Shenzhen properties which are operating without supply chain experience.In addition,this paper also conducts a rigorous statistical test from the perspective of statistical analysis.The results confirmed that there is a significant positive correlation between supply chain experience and corporate value.At the same time,this paper uses panel data regression method to select the national real estate industry data for regression.The analysis results showed that the company with the supply chain experience of the chairman has significantly improved the enterprise value.From the vertical and horizontal dimensions,this paper uses statistics,econometrics and other methods to confirm that the chairman's supply chain experience helps to enhance the company's value.For further analysis,this paper combines the information effect of social capital and the effect of resource integration to study the impact mechanism of the chairman's supply chain experience on corporate value.It has discovered that during the tenure of Li Yongming,the second chairman of the company,Shenzhen Ye had a significant increase in market share and reached a stable state.At the same time,the operating costs of Shenzhen Ye had decreased significantly.From the results of the panel data regression,in the real estate industry,the chairman of the supply chain experience significantly increased the company's market share while reducing operating costs.The results from micro to macro showed that the chairman's supply chain experience has the dual functions of “expanding the market” and “saving costs”,providing evidence for the increase in corporate value.Thirdly,this paper points out that the chairman's supply chain experience is a “double-edged sword”,which could easily forms a “small circle” of interests,and reduces the value of the enterprise.Through comparative analysis and statistical analysis,it was confirmed that at the late stage of second chairman at Shenzhen Ye,the company's market share was significantly lower than the real estate industry average,and the operating cost was significantly higher than the industry average.This result indicates that the supply chain experience may have formed a “small circle” of interests,which has hindered the flow of information and resources,then has reduced corporate value.At the end,the second chairman was sentenced for corruption and rent-seeking,confirming the rationality of theoretical analysis and financial analysis of this paper.At the bottom of this paper,it proposes in the policy recommendations that it is necessary to give a full play to the expertise of supply chain from the board of directors,and to realize the corporate mechanism of “expert governance” and “expert management”,which will help to enhance the company's value.However,in the corporate governance during the transitional economy,we must also pay close attention to the negative impact of the social capital of China's human society,strictly monitor the “small circle” effect caused by the supply chain relationship network,and avoid the phenomenon of “one word” of the expert chairman by promoting balances of board of directors to prevent corruption.The research in this paper provides a new perspective for the study of relational networks in the context of China's transitional economy,enriching the literature on the personal background and corporate governance of executives.At the same time,the research in this paper provides new evidence for the "circle problem" of the relationship network,and provides a new perspective on regulations to reduce agency problems and prevent potential corruptions.