Does powerful executive holding a dual post as the board secretary reduce nonpunitive regulation?

Abstract

To test whether powerful executives serving concurrently as board secretary can influence nonpunitive administrative supervision, this paper employs a sample of 2014–2020 Chinese A-share listed companies for empirical analysis. Results show that firms with powerful executives serving concurrently as the board secretary are more likely to be questioned by the Exchanges. The mechanism test shows that powerful executives serving concurrently as the secretary can increase agency costs and reduce information quality. Further findings illustrate that for companies with powerful executives holding a dual post, the issues mentioned in the comment letters are more serious, and the probability of a late reply is higher. Moreover, the concurrent appointment of the vice president or director is more likely to cause the company to be questioned, while this is not the case for the CFO. This paper shed new insights on the evaluation of the economic consequences of the powerful executives holding a dual post as the board secretary based on comment letter data.