ABSTRACT
Using a large sample of Chinese A-share listed firms during 2008–2017, this study investigates whether and how the informal hierarchy of independent directors affects two types of agency costs. We find that the informal hierarchy of independent directors is negatively correlated with the two types of agency costs and the negative effect is robust to alternative empirical designs. Moreover, our further research indicates that ownership structure matters for the performance of independent directors. We provide empirical evidence for optimizing the independent director team structure and improving corporate governance.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1. We exclude observations of ST companies to avoid outliers.
2. We exclude observations of financial firms because of their unique asset structure and regulatory oversight.
3. CSMAR’s official site: http://www.gtarsc.com/
4. Due to space limitations, some results are not listed and kept for future reference.