Abstract
The economy is an essential factor in constructing a resilient city, and listed companies play a vital role in the local economy. From the microbehavior of corporate governance, we examine the relationship among corporate governance, agency costs, and corporate sustainable development for a panel sample of 690 state-owned firms in China during 2015–2019. We found that agency costs mediate the relationship between board size, management compensation, debt ratio, dividend policy, and corporate sustainable development. Specifically, decreasing the board size can reduce agency costs and enhance the company’s sustainable development capabilities. The existing compensation system is to the disadvantage of the sustainable development of the company. Increasing the salaries of managers will increase agency costs and reduce the company’s ability to develop sustainably. Although increasing liabilities can reduce agency costs, increasing liabilities will increase financial risks. The bankruptcy costs caused by increasing liabilities are more significant than agency costs, which leads to a decline in the company’s ability to develop sustainably. The implementation of cash dividend policies will help reduce agency costs, thereby increasing their sustainable development capabilities. This also provides new ideas for the Modigliani–Miller (MM) theory and agency cost theory.
Highlights
E influence of corporate governance on corporate sustainability is still a core subject in the financial sector
It shows that the Chinese government, the State-owned Assets Supervision and Administration Commission, and other departments have been influential in managing state-owned enterprises
The size and independence of the board of directors of state-owned enterprises are positively related to the company’s sustainable development capability; that is, increasing board members and independent directors is beneficial to the future development of the company. ird, enterprises should establish a complete management compensation system. e existing compensation system is not conducive to the sustainable development of the company
Summary
E influence of corporate governance on corporate sustainability is still a core subject in the financial sector. When studying the sustainable development of enterprises, more and more scholars pay attention to corporate governance These theories often have relatively strict assumptions, making these theories not practicable in the real world. Centered on this consideration, we hope to clarify the partnership between corporate governance and corporate sustainability growth by incorporating agency expense as a mediating aspect. E Chinese government has been committed to reducing agency costs of state-owned enterprises, enhancing state-owned enterprises’ sustainable development capabilities, and increasing city resilience. Rough the above tests, we are looking for ways to reduce state-owned enterprises’ agency costs, improve their sustainable development capabilities, and enhance urban resilience. We examine the mediating effect of the agency cost and clear its impact on corporate sustainable development and provide empirical support for agency costs theory. ird, we may provide other countries with reference opinions on the governance of state-owned companies through the analysis of Chinese state-owned enterprises
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