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Local Tenure, Property Rights and Government Subsidy |
LIU Zhongyan,ZHOU Zejiang |
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Abstract Independent directors' supervision role has been widely examined by extant literature, but their advisory role is often ignored by academia. Using A-share companies listed on Shanghai Stock Exchange and Shenzhen Stock Exchange from 2007 to 2014 as analytical sample, this paper empirically tests the effect of independent directors on corporates' competence in acquiring government subsidy from the perspective of independent directors' local tenure. It is markedly documented that firms with more local independent directors are more likely to get government subsidy and get more government subsidy. Further study based on property rights denotes that the positive association between local independent directors and government subsidy is significantly ineffective in state-owned enterprises. The results indicate that, if properly utilized, the abundant social capital of independent directors can help enterprises gain scarce subsidy resources, yet the process of which is constrained by the firms' property rights, and it is out of operation in state-owned enterprises.
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Received: 09 March 2016
Published: 15 September 2016
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Corresponding Authors:
ZHOU Zejiang
E-mail: ahuzzj@126.com
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