Board Networks and Financing Constraints: Governance Effect and Information Effect
- YIN Zhujia, ZENG Hao &MAO Chenxu
- YIN Zhujia (Changsha University of Science & Technology, 410114)ZENG Hao (Hunan University, 410079)MAO Chenxu (Zhengzhou University, 450001)
This paper discusses the impacts of board networks on constraints of corporate financing, adopting the method of social network research. Empirical data shows the board networks can indeed alleviate corporate financing constraints. The higher the network centrality is and the richer the network is in structural holes, the more powerful influences the board networks have on lowering investment-cash flow sensitivity. Interestingly, structural holes have more effects than network centrality do. In terms of the mechanism, the board networks alleviate constraints of corporate financing through governance effect and information effect. Governance effect improves the effectiveness of corporate governance and information effect reduces the information asymmetry between inside and outside the company. After measuring constraints of corporate financing by SA index and controlling the endogenous problems, the conclusions remain robust.
JEL：G30, G32, G34
- Board Networks, Corporate Financing Constraints, Governance Effect, Information Effect