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How Does Firm Life Cycle Affect Board Structure? Evidence from China's Listed Privately Owned Enterprises

  • Yunhe Li (a1) and Xiaotian Tina Zhang (a2)
Abstract

Using data from China's listed privately owned enterprises (POEs) during the period from 2002 to 2014, we explore the effects of firm life cycle on board structure. We find that the board size of China's listed POEs declines over firm life cycle, and there is a trend of separation for board chair-CEO duality while board independence remains almost static. We further provide evidence that board size and independence are determined by the benefits of monitoring and advisory roles of the boards through all the stages of firms’ life cycle with different drivers. The impact of CEO power on board chair-CEO duality is determined by the benefits and costs of separation of board chair, and CEOs are supported at all stages of firms’ life cycle. This article sheds light on the dynamic board structure in an emerging economy where the external corporate governance is weaker than that of developed countries. Our findings suggest that the board structures of China's listed POEs are adjusted at various stages of firms’ life cycle, and the adjustments are mostly based on the resources brought by the new board of directors.

摘要:

本文采用2002至2014年中国民营上市公司的数据, 研究企业生命周期对公司董事会结构的影响。结果表明:民营上市公司的董事会规模随企业生命周期递减, 董事长与CEO两职合一随企业生命周期走向分离, 董事会独立性在企业生命周期内几乎保持不变。我们进一步发现, 在企业生命周期的所有阶段, 董事会规模与独立性主要取决于董事会履行监督与咨询角色所带来的好处, 而且在企业生命周期的不同阶段, 驱动董事会履行监督与咨询角色带来好处的因素有所不同。在企业生命周期的所有阶段, CEO权力对董事长CEO两职合一的影响都取决于董事长CEO两职分离的好处和成本。本文揭示了在新兴市场经济中, 外部治理偏弱的环境下, 董事会结构的动态变化。研究表明中国民营上市公司董事会结构在企业生命周期不同阶段会发生调整, 该调整更多地源于新董事带来的资源。

चीन के सूचीबद्ध निजी स्वामित्व वाले उद्यमों के 2002 से 2014 के बीच प्राप्त आंकड़ों का प्रयोग करते हुए हमने फर्म जीवनचक्र के बोर्ड संरचना पर प्रभाव का अनुसंधान किया है. हमने पाया की जहाँ इन उद्यमों में बोर्ड के आकार में जीवनचक्र पर्यन्त ह्रास होता है और बोर्ड मुखिया व मुख्य अधिशासी की पृथकता जनित द्विविधता परिलक्षित होती है वहीं बोर्ड की स्वायत्तता यथावत रहती है. हमने यह भी साक्ष्य किया है कि बोर्ड आकार और स्वायत्तता फर्म जीवनचक्र के सारे चरणों में भिन्न प्रेरणाओं से बोर्ड की निगरानी और सलाहकारी भूमिकाओं के लाभ पर आधारित हैं. बोर्ड मुखिया-मुख्य अधिशासी द्विविधता के सन्दर्भ में मुख्य अधिशासी की प्रभाविता फर्म के जीवनचक्र के सारे चरणों में पृथक्करण के लागत व लाभ पर आधारित है. यह शोध अध्ययन उदीयमान अर्थव्यवस्थाओं में, जहाँ बाह्य कंपनी नियंत्रण विकसित देशों की तुलना में कमज़ोर होता है, बोर्ड संरचना की गतिशीलता पर प्रकाश डालता है. हमारे परिणाम यह संकेत देते हैं कि चीनी निजी स्वामित्व उद्यमों में बोर्ड संरचना फर्म जीवनचक्र के विभिन्न चरणों में समायोजित होती है और यह समायोजन अधिकतर नवीन बोर्ड ऑफ़ डायरेक्टर द्वारा प्रदत्त संसाधनों पर आधारित होता है.

SUMÁRIO:

Usando dados de empresas privadas listadas na China (POEs) durante o período de 2002 a 2014, exploramos os efeitos do ciclo de vida da empresa na estrutura do conselho.

Descobrimos que o tamanho do conselho de administração dos POEs listados na China diminui ao longo do ciclo de vida da empresa, e há uma tendência de separação da dualidade presidente do conselho-diretor presidente, enquanto a independência do conselho permanece quase estática. Além disso, fornecemos evidências de que o tamanho e a independência do conselho são determinados pelos benefícios dos papeis de monitoramento e aconselhamento dos conselhos em todas as etapas do ciclo de vida das empresas com diferentes motivadores.

O impacto do poder do CEO na dualidade presidente do conselho-diretor presidente é determinado pelos benefícios e custos da separação do presidente do conselho, e CEOs são apoiados em todos os estágios do ciclo de vida das empresas. Este artigo lança luz sobre a estrutura dinâmica do conselho em uma economia emergente, onde a governança corporativa externa é mais fraca do que a dos países desenvolvidos. Nossas descobertas sugerem que as estruturas do conselho de administração dos POEs listados na China são ajustadas em vários estágios do ciclo de vida das empresas, e os ajustes são baseados principalmente nos recursos trazidos pelo novo conselho de administração.

АННОТАЦИЯ:

Как жизненный цикл фирмы влияет на структуру совета директоров? Данные из китайских частных предприятий, которые зарегистрированы на фондовой бирже

АННОТАЦИЯ: На основании данных из китайских частных предприятий (ЧП), зарегистрированых на фондовой бирже, в период с 2002 по 2014 годов, мы изучаем влияние жизненного цикла фирмы на структуру совета директоров. Мы обнаруживаем, что размер совета директоров в китайских частных предприятиях (ЧП) уменьшается в течение жизненного цикла фирмы, а также существует тенденция к разделению ролей председателя правления и генерального директора, в то время как независимость совета директоров остается почти неизменной. Мы также предоставляем доказательства того, что размер и независимость совета директоров зависит от преимуществ, которые связаны с контрольными и консультативными функциями совета директоров на всех этапах жизненного цикла фирмы благодаря разным факторам. Степень влияния генерального директора на распределение полномочий между должностями председателя правления и генерального директора определяется соотношением выгод к затратам в случае разделения ролей председателя правления и генерального директора на всех этапах жизненного цикла фирмы. Данная статья проливает свет на динамическую структуру совета директоров в стране с развивающейся экономикой, где внешнее корпоративное управление слабее, чем в развитых странах. Наши результаты свидетельствуют о том, что структура совета директоров в китайских частных предприятиях (ЧП), зарегистрированых на фондовой бирже, корректируется на разных этапах жизненного цикла фирмы, а эти изменения, как правило, основаны на ресурсах, которые были внесены новым советом директоров.

КЛЮЧЕВЫЕ СЛОВА: двойственные отношения между председателем правления и генеральным директором, независимость совета директоров, размер совета директоров, структура совета директоров, Китай, жизненный цикл фирмы, частные предприятия (ЧП)

RESUMEN:

RESUMEN: Usando datos de empresas de propiedad de privada que cotizan en bolsa en China durante el período 2002 a 2014, exploramos los efectos del ciclo de vida de la empresa en la estructura de la junta. Encontramos que el tamaño de la junta de las empresas privadas que cotizan en bolsa en China disminuye a lo largo del ciclo de vida de la empresa, y existe una tendencia de separar la dualidad del presidente de la junta directiva – CEO mientras que la independencia de la junta permanece casi estática. Además, damos evidencia de que el tamaño de la junta y la independencia están determinados por los beneficios de los roles de monitoreo y de asesoría de las juntas en todas las etapas del ciclo de vida de las empresas con diferentes motivadores. El impacto de la dualidad del poder del CEO en el presidente de la junta-CEO está determinado por los beneficios y los costos de separar la presidencia de la junta y el CEO respaldados en todas las etapas del ciclo de vida de las empresas. Este artículo arroja luz sobre la dinámica de la estructura de la junta en una economía emergente donde el gobierno corporativo externo es más débil que el de los países desarrollados. Nuestros hallazgos sugieren que las estructuras de junta de las empresas privadas que cotizan en bolsa en China se ajustan en diferentes etapas del ciclo de vida de las empresas, y los ajustes son principalmente basados en los recursos traídos por la nueva junta directiva.

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Corresponding author: Yunhe Li (yhli@sfs.ecnu.edu.cn)
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