Abstract
Relationship culture is one of the important characteristics of China’s social culture, and has an impact on financial decision-making for Chinese listed companies. Independent directors as the company’s external supervisors play an important supervisory role. However, it is common for independent directors to become ornamental directors. CEO’s social relationship is an important factor affecting the source of independent directors. Now there is little literature to discuss the impact of this social relationship on R&D. This paper empirically tests the impact on R&D of the relationship between CEO and independent director in Chinese A-share listed companies. The results show that the social relationship between CEO and independent directors can promote the R&D and the social relationship between CEO and independent directors has a more significant impact on R&D for non-SOE, low level of corporate governance, tight financing constraints in Chinese listed companies. Therefore, the conclusion of this paper provides a unique view for the discussion of the governance role of independent directors in theory and the impact of social networks on decision-making in Chinese Listed Companies and provides a reference for improving the independent director institutions in practice.
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