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Executive power and politically connected independent directors: evidence from China

Author

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  • Wei Wei

    (Beijing Jiaotong University)

  • Yulia Muratova

    (Aarhus University)

Abstract

Political connections have been shown to be important for firms’ survival and growth particularly in emerging economies, but our understanding of its determinants is rather limited. Drawing upon managerial power theory, we posit that executive power will be negatively associated with the percentage of politically connected independent directors (PCIDs) among all independent directors, and this effect will hold for independent directors with government background, but not for those with legislative background. In addition, we argue that state ownership will weaken the impact of executive power on the concentration of PCIDs. Using a sample of 2424 Chinese listed firms from 2004 to 2014 we find strong support for our hypotheses. Our study is the first to theoretically explain and empirically show that executive power will impact the formation of firms’ political connections.

Suggested Citation

  • Wei Wei & Yulia Muratova, 2022. "Executive power and politically connected independent directors: evidence from China," Asian Business & Management, Palgrave Macmillan, vol. 21(1), pages 1-24, February.
    • Handle: RePEc:pal:abaman:v:21:y:2022:i:1:d:10.1057_s41291-020-00104-4
    DOI: 10.1057/s41291-020-00104-4
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