Can supply chain information disclosure break financing barriers? What an independent directors' network centrality shapes credit access

This study examines the effect of independent directors on carbon information disclosure (CID) in China from 2011 to 2017. Additionally, this study investigates the effect of independent director’s attributes (gender, academic experience, and political connection) on the CID. To test our hypothesis, we collected data of 511 Chinese listed firms. The empirical results show that independent directors have a positive influence on the CID. Moreover, the independent female directors, independent academic directors and independent politically connected directors also enhances the CID. Our findings offer shareholders, regulators, and other stakeholders an integrating perspective on motivating firms to disclose high quality carbon information.

This study examines the impact of the independent directors' social network on earnings management before and during the COVID-19 pandemic. The COVID-19 pandemic increased uncertainty and pressure in the business environment, which led to intensified earnings management of listed companies worldwide. The research constructs centrality indexes of the independent director social network through the social network analysis method and conducts an empirical study on 1,167 A-share listed companies in China from 2009 to 2020. The relationship between independent directors' network centrality and accrual-based earnings management of companies is examined. Empirical results reveal that independent directors' network centrality is associated with higher accrued earnings management and undesirable corporate practices such as earnings management can be disseminated through directors' social networks. This research innovatively incorporates the research findings into the COVID-19 context, further indicating that independent directors' social network is associated with higher accrued earnings management during the COVID-19 period than before. This research will provide insights for regulators, specifically regulators in China, regarding the independent directors' composition and effectiveness.

Exploiting the mandatory disclosure requirement for independent directors’ votes in Chinese listed firms, this study investigates how penalties for information disclosure violations influence the dissenting behaviors of independent directors at firms with director interlocks. The results suggest penalties for information disclosure violations may encourage independent directors to express dissent on board proposals that are raised by director-interlocked firms. Further analyses show that as the severity of penalties increase, independent directors become more likely to express dissent, particularly about information disclosure issues. This dissenting behavior significantly improves the director-interlocked firm’s information disclosure quality and reduces the likelihood of being penalized for information disclosure violations. Finally, cross-sectional tests show that interlocked independent directors and independent directors with a background in finance, a greater reputation, and more power are more likely to dissent.

Independent directors’ connectedness and bank risk-taking

This paper examines the issue of independence of boards of directors and non‐executive directors of companies listed on the Irish Stock Exchange. Based on information published in annual reports, the study found that most Irish listed companies were complying with the Combined Code's recommendations for a balanced board structure, albeit with only 60 per cent having majority‐independent boards. The study found a lack of consistency in interpreting the definition of “independence”, a lack of disclosure of information and, by applying criteria generally regarded as prerequisite to independence of non‐executive directors, certain situations which imposed upon their independence.

This paper empirically investigates the relationship between independent directors’ connectedness and corporate innovation in China. We utilize a novel natural experiment initiated by an anti-corruption campaign to find that independent directors’ centrality in the board network has a significant positive effect upon corporate patenting. Further evidence suggests that the influence on corporate innovation is induced by information transmission in the board network.

Board independence and GRI-IFC performance standards: The mediating effect of the CSR committee

Ownership balance, supervisory efficiency of independent directors and the quality of management earnings forecasts

Purpose As an important corporate governance mechanism, independent directors have the responsibility to promote a high standard of carbon information disclosure (CID) by firms. The purpose of this study is to investigate the effect of independent director network on CID. Design/methodology/approach The authors establish the independent director network of Chinese A-share listed firms and evaluate the extent of CID by using text analysis methods on corporate annual reports and corporate social responsibility reports. Findings The authors discover a positive effect of the independent director network on CID. Mechanism tests show that this effect is associated with the advisory and monitoring roles of independent directors. Further analysis shows that firms with higher adjacent companies’ CID and stricter government environmental regulation can better leverage independent director network to promote CID. Originality/value This study enhances the current research by offering empirical evidence regarding the determinants of CID and social network of independent directors. This study also provides novel insights into the advisory and monitoring roles of independent directors.

Does the resignation of an independent director affect audit fees? An empirical study based on Chinese A-share listed companies

The July 16, 2002 preliminary report of the American Bar Association Task Force on Corporate Responsibility recommends a variety of reforms in corporate governance through changes in listing standards, rules of professional conduct for lawyers and other practices. Recommendations in the report relating to corporate governance are: - A substantial majority of the members of a board of directors should be independent. - Corporate governance committees should consist entirely of independent directors, and be responsible for identifying and contacting potential independent directors. They also should recommend a corporate code of ethics and conduct, including a means for corporate employees and agents to advise independent directors of information about material violations of law and breaches of duty to the corporation. - Corporate audit committees should consist entirely of independent directors. They should be authorized to recommend or take action to hire or remove outside auditors, engage independent accounting or legal advisers, and establish policies governing matters that could affect the independence of outside auditors. - Corporate compensation committees should consist entirely of independent directors, and should recommend or take action on compensation for senior executive officers or engaging independent executive compensation and legal advisers as necessary or appropriate. - All material transactions between the corporation and a director or executive officer should be reviewed and approved by a committee of independent directors, taking into account fairness, the rationale for the transaction, and appropriate public disclosure. - The board of directors should adopt procedures for routine executive session meetings between corporate officers responsible for implementing internal controls and the corporate governance committee or the audit committee, or both. The report also recommends that public companies consider designating a lead independent director or an independent board chair, establishing policies to set board meeting agendas, considering policies to set term limits or rotate service on board committees, maintaining director training programs, and adopting procedures to evaluate the effectiveness of meetings, information flow, diversity of experience among directors and contributions of individual directors. The report proposes that a number of changes in the ABA Model Rules of Professional Conduct be considered by the ABA Standing Committee on Ethics and Professional Responsibility. The changes the task force proposes to the ABA Model Rules would: - Require lawyers who know or reasonably should know of misconduct by corporate officers, employees or agents to disclose the misconduct to higher corporate authorities, in some cases directly to the board of directors. - Broaden permission for lawyers to disclose information about corporate conduct that has resulted in or is reasonably certain to result in substantial injury to the financial interests or property of another. The report acknowledges that the ABA House of Delegates rejected a similar proposal in February, before many of the corporate failures occurred and before the task force was created. - Require disclosure of confidential information to prevent client conduct known to the lawyer to involve a crime, including violations of federal securities laws, which is reasonably certain to result in substantial injury to the financial interests or property of another. The report also urges creation of direct lines of communication for outside counsel to inform the general counsel of any potential violations of law or breaches of fiduciary duties to the corporation. The ABA Task Force has invited written comments, and the report will be considered at one or more public hearings, and expects to present final recommendations to the ABA House of Delegates this year.

Social capital, independent director connectedness, and stock price crash risk

PurposeWith growing evidence of financial misconduct spreading through director networks, research on financial fraud contagion has garnered significant attention. This study incorporates the regulatory enforcement perspective into existing literature to examine how regulatory penalties mitigate financial fraud contagion within director networks.Design/methodology/approachThis study uses a panel dataset of A-share listed Chinese firms covering 2007–2022. Based on the nature of the dataset, we construct ordinary least squares regression models with firm- and year-fixed effects. Data are collected from the China Stock Market and Accounting Research, Wind Information Co., Ltd and China Research Data Services. We use Python to scrape the coordinates of regulators and firms and retrieve travel distances from the Baidu Maps API.FindingsThis study verifies the existence of financial fraud contagion in director networks. Our findings indicate that regulatory penalties can mitigate the contagion between director-interlocked firms, improving accounting quality. Moreover, the mitigation effects are mediated by independent directors’ dissent and auditors’ efforts at director-interlocked firms and are more pronounced when these firms have superior network centrality and internal control quality.Originality/valueThis study enriches the literature on financial fraud contagion by examining director networks and regulatory penalties. We propose mediating effects of auditor effort and director dissents on the relationship between regulatory penalties and financial fraud contagion. Our findings provide insights for regulators to alleviate pressures and highlight the importance for directors to consider financial risks within their networks.

Independent directors’ board networks and controlling shareholders’ tunneling behavior

It is of great significance to improve the corporate governance structure to study whether independent directors play the role of ‘vase’ in the governance of listed companies. Based on the social network theory, this article constructs the social network formed by interlocking independent directors and examines the influence of independent director network on stock price crash risk. The mechanism test analyses the mediating effect of principal–agent problem and large shareholder’s tunnelling on stock price crash risk. The empirical research shows that the higher the network centrality of the company’s independent directors, the lower the stock price crash risk. The independent director network can restrain the company’s stock price crash risk by reducing two types of agency costs. Further research finds that the influence of independent director network on stock price crash risk is more pronounced in companies with unreasonable ownership structure, poor internal governance and weak external supervision. The research conclusions have important implications for listed companies to reduce the risk of stock price crash and maintain the stability of the capital market.