Board interlocks and capital structure dynamics: evidence from China

Danmeng Li, Qiuju Jiang and Yong Mai

Accounting and Finance, 2019, vol. 59, issue S2, 1893-1922

Abstract: Using a sample of Chinese A‐share listed companies from the Shanghai and Shenzhen stock exchanges from 2007 to 2016, this paper investigates the effects of director network centrality on the speed of capital structure adjustment. The results indicate that firms in the central position of the director network have a higher speed of capital structure adjustment and a lower extent of deviation from the target capital structure. This effect is mainly significant for non‐state‐owned enterprises (non‐SOEs). Collectively, the evidence shows the network of interlocked directors creating mechanisms for information and resource exchanges, which enhance the efficiency of corporate financing polices.

Date: 2019
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