Do hometown connections affect corporate governance? Evidence from Chinese Listed Companies

Qiuhua Xu, Li Deng, Sen Li and Wen Huang

International Review of Economics & Finance, 2021, vol. 73, issue C, 290-302

Abstract: Based on the relational network theory, this paper examines how hometown connections between the chairman of the board and CEO influence accounting information quality in China. Taking A-share listed companies from 2007 to 2016 as the sample, we find that these connections can significantly improve corporations’ accounting information quality, particularly for private enterprises. Moreover, the chairman’s shareholding position, the marketization level of the company’s location and whether the chairman serves in his or her hometown also affect accounting information quality. Specifically, the positive contribution of the fellow relationship between chairman and CEO to accounting information quality is more significant in the case of the chairman holding shares, higher local marketization level and the chairman being local. This paper illustrates the chairman’s role in CEO oversight, enriches and expands the theory and approaches to internal governance.

Keywords: Hometown connections; Chairman of the board; Accounting information quality; State ownership; Corporate governance (search for similar items in EconPapers)
JEL-codes: G34 M14 M41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:73:y:2021:i:c:p:290-302

DOI: 10.1016/j.iref.2020.12.035

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