Board Interlocks And Firm Performance Under The Constraint Of Relative Available Resources

As an important form of inter-enterprise relationship,board interlocks play a crucial role in influencing enterprises to obtain external resources,integrate internal resources,and then affect enterprise performance.Based on the above influences on enterprises,more and more enterprises establish directors’ connections with other enterprises to achieve better development of themselves.Therefore,scholars have studied the influence of board interlocks on corporate governance effect by applying social network theory and modern corporate governance theory.However,due to the differences in research samples,economic background and other reasons,there has been no consistent conclusion on the influence of director connection on corporate performance,and the existing studies lack of mediating or regulating shadow.Existing studies have found that the positive impact of director connection on corporate performance is often based on the resource dependence theory,and the research that director connection has a negative impact on corporate performance can be summarized as the mechanism of agency theory.This paper argues that the reason why there are different directions for the influence of director connection on enterprise performance is not only the difference of research samples and economic background,but also the different influence mechanisms of director connection on enterprise performance in different situations.That is to say,cause the director of the coupling effects on enterprise performance in a different direction of the two mechanisms are not opposite,according to the core enterprise resource condition of different relative to other connection,director of the coupling effects on enterprise performance direction is different,the director of the coupling relationship with corporate performance depends on the core enterprise of relative available resources.Therefore,this paper studies the influence direction of director connection on enterprise performance under different situations of relative available resource level,which is crucial for enterprises to establish and manage director connection relationship based on their own resource level.Both belong to the relationship between enterprises,at the same time,the director of the connection in which participate in interlocked director also belongs to an important part of the internal corporate governance structure,while adding external factors(environment uncertainty)and enterprise internal factors(institutional investors)two aspects of regulating variable,also can help us better understand the role and mechanism of board interlocks between corporate performance.Based on the resource dependence theory and principal-agent theory,the basic content of the article in the Shanghai and Shenzhen A-share listed companies from 2010 to 2017 as the research sample,and according to the relative level of resources available in the sample is divided into different relatively rich resources available and the relative lack of available resources,two groups in the core enterprise of the connection number as explanatory variables,is on the core enterprise’s financial performance as explained variable,build multivariate linear regression model,through the descriptive statistics analysis,correlation analysis and regression analysis,considering relative available resources director coupling under different situation the difference effects on corporate financial performance.Meanwhile,environmental uncertainty and institutional investors,which can reflect the external and internal factors of the enterprise,are selected as moderating variables to construct a moderating effect model and investigate how environmental uncertainty and institutional investors affect the relationship between director bonding and enterprise performance.The research findings of this paper are as follows:Firstly,in the case of abundant available resources,there is a significant negative correlation between director bonding and enterprise performance.When the relative available resources of the core enterprise are abundant,the management and associated directors are under little external pressure and tend to seek rent from the associated enterprises for personal gain by using the abundant resources of the core enterprise.Therefore,the larger the number of associated enterprises owned by the core enterprise,the greater the extent of enterprise value infringement and the worse the financial performance.Secondly,in the case of absent relatively available resources,there is a significant positive correlation between director bonding and enterprise performance.When the relative lack of available resources,the core enterprise management and connect the director by external constraint is big,the director of the connection can be used as a kind of access to resources and information channels,provide enterprises with external scarce resources and information,therefore,the core enterprise has the more the number of connection,the stronger the ability to obtain external information and resources,the more can help enterprises to reduce the uncertainty in operation,so as to improve business performance.Thirdly,environmental uncertainty positively regulates the negative relationship between director bonding and enterprise performance in the case of relatively scarce available resources.The uncertainty of the extermal environment increases the external pressure faced by enterprises.At this time,directors can play a better role in obtaining external resources and information,so as to improve enterprise performance.Lastly,institutional investors positively adjust the positive relationship between director connection and enterprise performance under the circumstance of abundant available resources.Institutional investors have the motivation and ability to supervise the management,so as to alleviate the agency problems caused by the connection of directors under the condition of abundant resources,and weaken the negative impact of the connection of directors on corporate performance.The research results of this paper confirm that there are differences in the direction of the influence of director connection on enterprise performance under different levels of relative available resources in core enterprises.The theoretical contribution of this paper lies in deepening the internal mechanism of directors,association on corporate performance and enriching the research on environmental uncertainty and institutional investors.The practical significance lies in guiding enterprises to establish and manage the connection network of directors according to their own resources,introducing institutional investors to optimize the governance structure,and guiding enterprises to effectively deal with external uncertainties.