Bankers in the Boardroom and Firm Performance in China. Issue 8 (2nd August 2016)

• Record Type: Journal Article
• Authors: He, Qing; Rui, Oliver M.; Zhu, Chenqi
• Is Part Of: Emerging markets finance & trade. Volume 52:Issue 8(2016)
• Page Start: 1850
• Page End: 1875
• Publication Date: 2016-08-02
• Subjects: bankers -- China -- corporate governance -- firm value; Balkan Peninsula -- Commerce -- Periodicals; Balkan Peninsula -- Foreign economic relations -- Periodicals; Europe, Central -- Commerce -- Periodicals; Europe, Central -- Foreign economic relations -- Periodicals; Europe, Eastern -- Commerce -- Periodicals; Europe, Eastern -- Foreign economic relations -- Periodicals; Turkey -- Commerce -- Periodicals; Turkey -- Foreign economic relations -- Periodicals; Asia -- Commerce -- Periodicals; Asia -- Foreign economic relations -- Periodicals; Eurasia -- Commerce -- Periodicals; Eurasia -- Foreign economic relations -- Periodicals; 382.05
• DOI: 10.1080/1540496X.2015.1032144
• Languages: English
• ISSNs: 1540-496X

Abstract

ABSTRACT: We use a dataset comprising the appointments of commercial bankers as board of directors at Chinese listed firms and find that financially distressed firms are more likely to recruit a commercial banker as a director of the board. The presence of a banker on the board increases access to bank loans, yet many investors react negatively to announcements of such appointments. We also find that such appointments are typically followed by a drop in the appointing firm's operating performance, and an increase in rent-seeking activities. This suggests that bank directors cannot strengthen corporate governance. Most financial resources are expropriated by corporate insiders.