Globalization Of Board And Enterprise Risk

As the core organization of enterprise governance,the board of directors can alleviate the agency problem to a certain extent.At the same time,the perfect governance structure of the board of directors can constrain the opportunistic behavior of management,enhance the reliability of business decision-making,enhance the core competitiveness of enterprises,and thus reduce Enterprise risk.In recent years,the vertical development of economic globalization has made trade between countries more frequent,that is,the internationalization of business and transactions has become increasingly obvious.Under such a background of internationalization,along with the rapid development of the market,China has also raised corresponding international demands for executives of various enterprises.Some scholars have found that economic globalization and the deepening of human capital internationalization have led more and more companies to hire foreign directors to participate in business management(Staples,2007).The international board of directors has become a new trend in modern enterprise governance.According to the theory of resource dependence and principal-agent theory,directors mainly play their supervisory and control functions by actively participating in enterprise governance.Compared with mainland China directors,foreign directors have certain differences in cultural traditions,values and governance concepts.At the same time,the high-level echelon theory shows that under the premise of bounded rationality,the observable characteristics of senior management,such as education,gender and age,as well as unobservable characteristics such as values and personality,will affect their cognition and risk preferences,thus affecting their strategic choice.And decision making.In the face of complex and ever-changing internal and external environments,the company's operation and financial situation are also facing greater instability.How to control risks has become a key issue that must be considered in the long-term development of enterprises.Throughout the existing literature at home and abroad,most of the research on board diversity is based on gender,age,educational background and work experience diversification,and explore their relationship with enterprise performance,enterprise governance and enterprise innovation,but because of The internationalization of the board of directors is also an important research area for the diversity of the board of directors(Garcia,2015).There is little literature on the issues related to the internationalization of the board of directors and enterprise risks.In order to study the impact of board internationalization on enterprise risk,and the different roles of the company's external governance mechanism(institutional investor shareholding)and internal governance mechanism(two jobs),this paper takes China's 2009-2017 Shanghai and Shenzhen A As a research sample,the listed companies manually collect the internationalized data of the board of directors through the executive resumes published by the listed companies.The beta coefficient is used as the proxy variable of the enterprise risk.The relationship between the internationalization of the board of directors and the enterprise risk is empirically tested by a linear regression model..The research results of this paper show that:(1)There is a significant negative correlation between the internationalization of the board of directors and enterprise risks.That is,when foreign directors exist in the board of directors of listed companies,the enterprises risks are lower.(2)The internal and external governance mechanism of the company will have an impact on the relationship between the internationalization of the board of directors and enterprise risks.Specifically: compared with the institutional investors with higher shareholdings,when the institutional investors hold lower shares,the effectiveness of the board internationalization to reduce enterprise risks is more significant;compared with the chairman and general manager Enterprises,when the chairman of the company does not have a concurrent general manager,the effectiveness of the board's internationalization to reduce enterprise risks is more significant.The above conclusions are still valid after narrowing down the scope of measurement of explanatory variables,changing the way in which explanatory variables are measured,changing the way in which explanatory variables are changed,increasing control variables at the enterprise governance level,and narrowing the sample interval.At the same time,further tests of this paper found that:(1)The mechanism for the board of directors to reduce enterprise risk is to alleviate agency problems to reduce agency costs,thereby reducing enterprise risk.(2)Both foreign independent directors and foreign non-independent directors can reduce enterprise risks,but the results of foreign non-independent directors reducing enterprise risks are more significant.Based on the above research results,this paper puts forward the following suggestions:(1)Actively introduce high-level overseas talents,improve the independence of the board of directors,and enhance the governance efficiency of the board of directors.(2)Increase the intensity of the development of institutional investors.(3)Strengthen the internal supervision mechanism of the enterprise.(4)Reasonably formulate overseas talent introduction plans and implementation of relevant policies.At the theoretical level,the research results of this paper not only enrich the research on the international economic consequences of the board of directors,but also provide a new explanation for the influencing factors of enterprise risk from the perspective of the internationalization of the board of directors.At the practical level,the above empirical results prove that the internationalization of the board of directors can reduce the risk of the enterprise.On the one hand,it helps the investors to identify the enterprise risks,and on the other hand,it provides a reference for the listed company to improve the board system.