The Impact Of Board Governance On Corporate Diversification:A Study Of The Mediating Effect Based On Executive Overconfidence

With the rapid development of China's economy in recent years,most domestic listed companies have implemented diversified operations through mergers,acquisitions and restructurings.Diversified development has become an important way for the expansion and development of large domestic enterprises.Relevant research finds that people are prone to over-confidence psychological characteristics in decision-making,and corporate executives are more common in corporate executives because they are in a high position and have the right to manage business and strategic decision-making.Does the overconfidence of executives in enterprises affect the diversified business decisions of enterprises? Board governance is an important part of corporate governance,and its functional role is mainly reflected in two aspects.On the one hand,it can participate in the daily business decision-making of the enterprise,which can restrain the merger and over-investment of the enterprise;on the other hand,the board of directors can also supervise the behaviors of the senior executives of the enterprise,thereby suppressing the overconfidence behavior of the executives.As an important part of corporate governance,what is the role of board governance in the process of corporate diversification? This paper analyzes the impact of board governance on corporate diversification based on the overconfidence of executives.According to the above,this paper firstly explores and demonstrates the relationship between board governance,executive overconfidence and corporate diversification.In the empirical part,this paper takes the financial data of listed companies in China's Shanghai and Shenzhen A-shares from 2013 to 2017 as a sample,and empirically analyzes the mechanism of influence of board governance on corporate diversification from the perspective of executive overconfidence.The results obtained show that the overconfidence of executives promote diversification strategies;and the intervention of board governance will inhibit the development of diversification strategies,The suppression effect is reflected in two aspects.On the one hand,the governance of the board of directors weakens the blind expansion of corporate executives.On the other hand,it stems from the suppression of overconfidence of executives,which indirectly weakens the level of diversification of enterprises.Finally,this paper combines the theory and the empirical results obtained,and proposes the following suggestions : On the one hand,it is necessary to appropriately expand the scale of the board of directors;on the other hand,it is necessary to strengthen the proportion of independent directors and the separation of the two positions,thereby enhancing the independence of the board.