Network position, governance role of independent directors and corporate violation of rules: Using a Bivariate Probit model with partial observability

作者：Wan, Liang-Yong; Deng, Lu; Zheng, Xiao-Ling

来源：Systems Engineering-Theory & Practice, 2014, 34(12): 3091-3102.

• Bivariate probit
• Corporate governance
• Corporate violation of rules
• Independent directors
• Information disclosure
• Network centralities
• Partial observability
• Social capitals

Researching the governance role of independent directors on the network view is an updated field of corporate governance. Using the Bivariate Probit model, this study investigates the influence of network position of independent directors on corporate violation of rules. Independent directors with rich network relationships can possess more social capital to improve their motivation and ability of monitoring, which will reduce the possibility of corporate violation of rules. Consistent with theoretical analysis, the result shows that the network centrality of independent directors has significantly negative relationship with the propensity of corporate violation of rules. The study reveals that network of independent directors has positive influence on their monitoring roles. The complementary tests show that the active effect of independent director networks exists in the aspect of information disclosure fraud, but not in the aspect of other kinds of fraud;networks of independent directors entering audit committees have active effect, but others have not;the active effect of independent director networks is more significant in firms with worse profitability. This paper complements the literature of independent directors, board networks and corporate violation of rules.

• 出版日期2014-12-25
• 单位华南理工大学; 北京大学