Corporate digital transformation, governance shifts and executive pay-performance sensitivity

Li, Zhigang; Xie, Bingyuan; Chen, Ximing; Fu, Qilong

doi:10.1016/j.irfa.2023.103060

Cited by 27 publications

(2 citation statements)

References 51 publications

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“…The application of digital technology has enhanced the information environment within enterprises, effectively mitigating the issue of information asymmetry ( Niu et al, 2023 ). By enhancing the transparency of financial information and internal controls ( Goldfarb and Tucker, 2019 ), shareholders are empowered to more effectively monitor operational conditions and inhibit the short-sighted opportunistic behavior of managers ( Li et al, 2024 ). Therefore, as a crucial tool for management and supervision ( Obwegeser et al, 2020 ), digital technology can effectively mitigate the management entrenchment associated with staggered boards, reduce the opportunistic behavior of the management, enhance the efficiency of managerial decision-making processes, and thereby restrain excessive financial investments by enterprises.…”

Section: Further Analysismentioning

confidence: 99%

“…It is found that both managerial ownership and audit supervision help to inhibit the promoting effect of staggered boards on corporate financialization, and improve the efficiency of corporate asset allocation. Furthermore, the advent of cutting-edge digital technologies is poised to revolutionize corporate governance through their seamless integration with enterprises ( Li et al, 2024 ; Zhang and Wang, 2024 ). We find that digital transformation can significantly inhibit the promotion effect of staggered board on corporate financialization.…”

Section: Introductionmentioning

confidence: 99%

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A study of the impact of staggered boards on corporate financialization: from the perspective of board governance

Cao,

Zhang

2024

Front. Psychol.

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IntroductionThe objective of this study is to assess the influence of staggered boards on corporate financialization and the role that incentive and supervision mechanisms play in this process.MethodsWe employ a total of 20,647 panel data samples of Chinese A-share listed companies over the period 2011-2020 to empirically test the impact of staggered boards on corporate financialization in the Chinese context.ResultsThe results indicate that implementing staggered boards significantly increases levels of corporate financialization. On the one hand, the implementation of a staggered board structure can exacerbate the speculative mindset and profit-driven behavior among board members, leading management to prioritize financial investments for personal gain. On the other hand, a staggered board system may also amplify managerial laziness, potentially incentivizing them to rely heavily on financial investments in order to swiftly achieve performance targets with minimal effort. Furthermore, both managerial ownership and audit supervision are found to be critical factors in mitigating this positive impact and preventing excessive financial investment behavior.DiscussionThis paper offers guidance on comprehending the applicability of staggered board provisions and mitigating financial risks in enterprises.

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