Research On The Impact Of CEO Power On Public Companies’ Violations

Since the establishment of China’s securities market,there have been numerous violations cases of public companies,which have caused huge economic losses to the capital market.Since 2006,about 30% public companies have been disciplined by various regulators for violations.The occurrence of these situations limits companies’ healthy development.Starting from the rational man hypothesis,the CEOs are more willing to commit opportunistic behavior and have stronger will to enforce violations,when internal and external monitoring mechanisms of company is fragile.After summarizing relevant academic theoretical articles and professional literature on CEO power,violations,this paper uses public companies’ panel data from2010 and 2019 to analyze the relationship between CEO power and violations and we also explored the mediating effect and the regulating effect.Finally,we further discussed the impact of CEO power on different types of corporate violations.By analyzing the empirical data,this paper have found the following main conclusions based on principal-agent theory and fraud theory:(1)The bigger the CEO power,the higher possibility of public companies to enforce violations;(2)The bigger the CEO power,the lower quality of internal control,and internal control will mediating the influence of CEO power on public companies’ violations;(3)The nature of property rights moderates the relationship between CEO power and corporate violations.The positive relationship between CEO power and corporate violations is stronger in stateowned enterprises than in non-state-owned enterprises;(4)Financial distress moderates the relationship between CEO power and corporate violations.The positive relationship between CEO power and corporate violations is stronger under internal financial distress pressure circumstances compared to those without financial distress.(5)Management self-motivation moderates the relationship between CEO power and corporate violations.The positive relationship between CEO power and corporate violations is stronger under high-level management self-motivation compared to lowlevel management self-motivation.This paper will enrich the research perspective of CEO power and partially explain the mystery of corporate violations from the perspective of internal management mechanisms.