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Independent Director Networks and Executive Perquisite Consumption——“Collusion” or “Coordination” in Governance?

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  • Yuwei Liu
  • Sheng Ma
  • Xuesong Tang

Abstract

Prior research documents that the network of independent directors brings abundant resources and information advantages. Does it raise the possibility of executives engaging in rent-seeking? This paper investigates the specific impact of the independent director network on executive perquisite consumption in China. The results show that the more substantial the network of independent directors is, the greater the degree of executive perquisite consumption. Different ownership types result in different mechanisms; director network centrality primarily increases the entertainment component of executive perquisite consumption in SOEs, implying “cooperation in governance” and exhibiting inverted U-shaped nonlinear features; director network centrality increases the supplementary component of monetary compensation for executive perquisite consumption in nSOEs, illustrating “coordination in governance.” Moreover, the “Eight Rules” and intense external supervision effectively restrain “collusion” of SOEs.

Suggested Citation

  • Yuwei Liu & Sheng Ma & Xuesong Tang, 2022. "Independent Director Networks and Executive Perquisite Consumption——“Collusion” or “Coordination” in Governance?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(13), pages 3824-3839, October.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:13:p:3824-3839
    DOI: 10.1080/1540496X.2022.2072202
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