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Conference Paper/Proceeding/Abstract 487 views

The Balance Between Board Monitoring and Advising: The Role of Social Capital

Bo Wang, Zhe Li Orcid Logo

European Financial Management Association Meeting

Swansea University Author: Zhe Li Orcid Logo

Abstract

We investigate how social capital, captured by the strength of cooperative norms and social networks within a geographical community, affects the internal organization of boards. We find that firms headquartered in high-social-capital communities have a more advisory-focused internal board structure...

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Published in: European Financial Management Association Meeting
Published: 2021
Online Access: https://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2021-Leeds/accepted%20papers/W.php
URI: https://cronfa.swan.ac.uk/Record/cronfa57258
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first_indexed 2021-07-02T07:13:50Z
last_indexed 2022-03-18T04:23:51Z
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fullrecord <?xml version="1.0"?><rfc1807><datestamp>2022-03-17T12:32:42.9527988</datestamp><bib-version>v2</bib-version><id>57258</id><entry>2021-07-02</entry><title>The Balance Between Board Monitoring and Advising: The Role of Social Capital</title><swanseaauthors><author><sid>c597db9f314a168667e3e40d5778db9c</sid><ORCID>0000-0003-1442-4499</ORCID><firstname>Zhe</firstname><surname>Li</surname><name>Zhe Li</name><active>true</active><ethesisStudent>false</ethesisStudent></author></swanseaauthors><date>2021-07-02</date><deptcode>BAF</deptcode><abstract>We investigate how social capital, captured by the strength of cooperative norms and social networks within a geographical community, affects the internal organization of boards. We find that firms headquartered in high-social-capital communities have a more advisory-focused internal board structure as they are more likely to set up specialized advisory committees and appoint more advisory directors. These findings are robust to instrumental variable analysis, propensity score matching, difference-in-differences analysis, alternative measures, and time-invariant firm characteristics. Additionally, the positive influence of social capital on board advisory focus is more palpable for firms with greater advisory needs and lower monitoring needs. Overall, our results are consistent with the interpretation that social capital serves as a societal monitoring mechanism to reduce board monitoring needs and, thus, boards of firms located in high-social-capital communities focus more on the advising function.</abstract><type>Conference Paper/Proceeding/Abstract</type><journal>European Financial Management Association Meeting</journal><volume/><journalNumber/><paginationStart/><paginationEnd/><publisher/><placeOfPublication/><isbnPrint/><isbnElectronic/><issnPrint/><issnElectronic/><keywords/><publishedDay>30</publishedDay><publishedMonth>6</publishedMonth><publishedYear>2021</publishedYear><publishedDate>2021-06-30</publishedDate><doi/><url>https://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2021-Leeds/accepted%20papers/W.php</url><notes>https://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2021-Leeds/accepted%20papers/W.php</notes><college>COLLEGE NANME</college><department>Accounting and Finance</department><CollegeCode>COLLEGE CODE</CollegeCode><DepartmentCode>BAF</DepartmentCode><institution>Swansea University</institution><apcterm/><lastEdited>2022-03-17T12:32:42.9527988</lastEdited><Created>2021-07-02T08:10:31.7274033</Created><path><level id="1">Faculty of Humanities and Social Sciences</level><level id="2">School of Management - Accounting and Finance</level></path><authors><author><firstname>Bo</firstname><surname>Wang</surname><order>1</order></author><author><firstname>Zhe</firstname><surname>Li</surname><orcid>0000-0003-1442-4499</orcid><order>2</order></author></authors><documents/><OutputDurs/></rfc1807>
spelling 2022-03-17T12:32:42.9527988 v2 57258 2021-07-02 The Balance Between Board Monitoring and Advising: The Role of Social Capital c597db9f314a168667e3e40d5778db9c 0000-0003-1442-4499 Zhe Li Zhe Li true false 2021-07-02 BAF We investigate how social capital, captured by the strength of cooperative norms and social networks within a geographical community, affects the internal organization of boards. We find that firms headquartered in high-social-capital communities have a more advisory-focused internal board structure as they are more likely to set up specialized advisory committees and appoint more advisory directors. These findings are robust to instrumental variable analysis, propensity score matching, difference-in-differences analysis, alternative measures, and time-invariant firm characteristics. Additionally, the positive influence of social capital on board advisory focus is more palpable for firms with greater advisory needs and lower monitoring needs. Overall, our results are consistent with the interpretation that social capital serves as a societal monitoring mechanism to reduce board monitoring needs and, thus, boards of firms located in high-social-capital communities focus more on the advising function. Conference Paper/Proceeding/Abstract European Financial Management Association Meeting 30 6 2021 2021-06-30 https://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2021-Leeds/accepted%20papers/W.php https://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2021-Leeds/accepted%20papers/W.php COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2022-03-17T12:32:42.9527988 2021-07-02T08:10:31.7274033 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Bo Wang 1 Zhe Li 0000-0003-1442-4499 2
title The Balance Between Board Monitoring and Advising: The Role of Social Capital
spellingShingle The Balance Between Board Monitoring and Advising: The Role of Social Capital
Zhe Li
title_short The Balance Between Board Monitoring and Advising: The Role of Social Capital
title_full The Balance Between Board Monitoring and Advising: The Role of Social Capital
title_fullStr The Balance Between Board Monitoring and Advising: The Role of Social Capital
title_full_unstemmed The Balance Between Board Monitoring and Advising: The Role of Social Capital
title_sort The Balance Between Board Monitoring and Advising: The Role of Social Capital
author_id_str_mv c597db9f314a168667e3e40d5778db9c
author_id_fullname_str_mv c597db9f314a168667e3e40d5778db9c_***_Zhe Li
author Zhe Li
author2 Bo Wang
Zhe Li
format Conference Paper/Proceeding/Abstract
container_title European Financial Management Association Meeting
publishDate 2021
institution Swansea University
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
url https://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2021-Leeds/accepted%20papers/W.php
document_store_str 0
active_str 0
description We investigate how social capital, captured by the strength of cooperative norms and social networks within a geographical community, affects the internal organization of boards. We find that firms headquartered in high-social-capital communities have a more advisory-focused internal board structure as they are more likely to set up specialized advisory committees and appoint more advisory directors. These findings are robust to instrumental variable analysis, propensity score matching, difference-in-differences analysis, alternative measures, and time-invariant firm characteristics. Additionally, the positive influence of social capital on board advisory focus is more palpable for firms with greater advisory needs and lower monitoring needs. Overall, our results are consistent with the interpretation that social capital serves as a societal monitoring mechanism to reduce board monitoring needs and, thus, boards of firms located in high-social-capital communities focus more on the advising function.
published_date 2021-06-30T04:12:51Z
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score 11.013148

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