Corporate governance in Chinese listed companies: how managerial characteristics matter?

Abstract

This thesis consists of three studies on corporate governance issues of Chinese listed companies. In the first study, I investigate the role of board secretaries in management earnings forecasts. Individuals in this senior executive position are responsible for coordinating information disclosure. I find that their legal and accounting expertise and foreign experience help improve management earnings forecast quality. The quality of forecasts, as indicated by forecast occurrence, frequency, precision and accuracy, is positively associated with board secretaries’ duality role and equity holdings, whereas it is negatively associated with their political connections. The quality of forecasts is found to increase the compensation of board secretaries. Finally, I show that the equity holdings of board secretaries reduce litigation risks and increase corporate philanthropic giving. Based on the notion that women cooperate more with women than with men, my second study examines the gender interaction effect between female top managers and female board directors in Chinese firms. I show that this gender interaction is positively associated with the firm’s accounting return but negatively associated with its stock price return. Earnings management, which can lead to overstated accounting numbers but unfavourable stock market reactions, partly explains the opposite results. Furthermore, I find that only the newly appointed female top managers engage in this earnings management. Overall, the findings suggest that the pressure on women to perform leads to ‘women helping women’, which is detrimental to shareholders’ value. Women are underrepresented on corporate boards. By employing the large variation in socioeconomic development across provinces of China, the third study shows that the barriers to board gender diversity are deeply rooted in societal gender role attitudes. I find that corporate boards tend to be more gender diverse in a province where there is a smaller gender difference in educational achievement in STEM disciplines, where there is a stronger belief that women and men possess equal intrinsic abilities, or where female political leaders are present in the provincial government or communist party. However, I find little evidence that female labour force participation or childcare provision would affect board gender diversity. Collectively, the findings suggest that it is the gender equality attitudes rather than the supply of average female labour that contribute to gender-diverse corporate boards.