Group Holdings Listed Company Executives Longitudinal Knock-on Effect On Firm Performance

Business groups play an important role in the development of national economy.As the scale of business groups in our country continuous to expand, the groupgovernance becomes a problem. How to strengthen the internal control of the groupmembers and coordinate the conflict has become the hot spot of research. In the West,interlocking directorates has been studied extensively. Theoretical basis have beenformed completely. However in our country, researches on interlocking directorate arerelatively small. Rare articles just study the impact of horizontal interlocking oncorporate performance, which are based on the aboard theory. Therefore, from thepoint of listed companies in group, this paper analyzes the impact of verticalinterlocking directorates on the agency cost and firm performance.On the basis of previous scholars’ research results of business group governanceand interlocking directorate, this paper put forward some hypothesis. Then choosingdates of listed companies in Shanghai and using statistical software to analyze date.We find that vertical interlocking directorates in the listed companies can reduceagency cost and promote the performance of public companies. What is more, listedcompanies in the group, a certain amount of ownership concentration are positivelycorrelated with the corporate performance. With vertical interlocking directorates,business group can strengthen the supervision and management of listed companiesand accelerate the transmission of development strategy and information in the group.Hope the result of this paper can provides some reference value to the groupgovernment and the research in vertical interlocking directorates.