Abstract
The purpose of this paper was to investigate the relationship between board independence and the firm performance of Chinese firms listed in the Shanghai Stock Exchange, under the moderating role of Corporate Social Responsibility (CSR). A total of 860 firm-year observations over a period of ten years, that is from 2010 to 2019 was collected. The panel data regression technique was employed to analyze the data and determine the relationship between board independence and the firm performance of the Chinese firms under investigation. After a robustness check, the empirical results showed that the level of the CSR moderated (reduced) the positive relationship between board independence and firm performance. Therefore, the results seemed to imply that although the CSR has been seen as a useful business strategy, the level of the CSR in China still needed to be improved. In order to improve firm performance through practicing the CSR, the Chinese government and enterprises should be encouraged to continuously improve the level of the CSR.
Highlights
The world market in the 21st century has already undergone profound and complex changes due to the accelerated development of economic globalization. today’s enterprises are facing great challenges and even cutthroat market competition as a result of the unstable and uncertain business environment in this new century (Taouab, 2019)
According to report published by The Organization for Economic Co-operation & Development (OECD) in 2004, good corporate governance should be encompassed of an active board of directors, chairperson and chief executive officer (CEO) should be held by two different persons, outside directors should constitute the majority members of the board, and there should be a two-tier board which to be the supervisory board and the other being the board of directors as tier-two
The results showed that Corporate Social Responsibility (CSR) could reduce the positive relationship between board independence and firm performance
Summary
The world market in the 21st century has already undergone profound and complex changes due to the accelerated development of economic globalization. today’s enterprises are facing great challenges and even cutthroat market competition as a result of the unstable and uncertain business environment in this new century (Taouab, 2019). Today’s enterprises are facing great challenges and even cutthroat market competition as a result of the unstable and uncertain business environment in this new century (Taouab, 2019) It seems that high and stable business performance is the key driving force for the firm’s long-term sustainability in today’s dynamic business environment. In August 2001, the China Securities Regulatory Commission (CSRC) had published a guidelines that highlighted on the requirement of independent directors sitting on the company’s board in listed companies in China. It is clearly stated in the guidelines that all listed companies in China are required to have at least one-third of their board members as independent directors by 2003 As a consequence, both theory and practice emphasized the importance of board independence
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