The Research Of The Influence Of Independent Directors Network On Companies' Financial Flexibility

The financial crisis that erupted in the United States in 2008 and the debt crisis that engulfed European countries in 2010 both demonstrated the enormous uncertainty in the capital market.Enterprises that are developing in such a volatile external markets need to timely deal with the adverse effects caused by environmental changes.If they are not careful,they will face financial distress due to not timely response.At present,China's rapid economic development and the increasingly close connection with the international market,the overall environment which Chinese companies faced is becoming more and more complicated.How to adjust in time to respond to the negative impact of changes in the capital market environment,and to grasp the valuable investment opportunities in the economic environment are crucial to the survival and development of the companies.Financial flexibility,as a measure of the companies' ability to get financial resources to cope with future environmental volatility timely,has its significance in both theory and practice under such a realistic background.Therefore,this article selects financial flexibility as part of the study.In recent years,scholars at home and abroad have gradually applied social network theory to corporate governance research,and found that the characteristics of independent directors' networks have important influence on corporate governance.China is also a traditional "relational society",and social networks have a large impact on individual behavior.China is a traditional "relational society" and social networks have a large impact on individual behavior.Therefore,this article chooses to explore the relationship between independent director network and corporate financial flexibility.Based on a certain theoretical analysis,this paper argues that the independent director's network position has a positive influence on the independent director's supervisory and advisory functions.Independent directors located in the center of the network can influence their financial flexibility through three aspects of cash flow,debt financing costs,and external financing through their supervisory and advisory functions.This paper uses the data of listed companies on the A-share main board of China during 2009-2014 as a sample to empirically examine the relationship between the independent director network and the companies' financial flexibility.After that,the nature of property rights is introduced to analyze whether the degree of influence is different between state-owned companies and non-state-owned companies.The results of the empirical analysis show that:(1)With the other conditions unchanged,the position of the independent director network has a positive influence on companies' financial flexibility.The higher the degree of centrality of independent director network,the greater the financial flexibility the companies have;(2)With the other conditions unchanged,compared with the state-owned listed companies,the positive correlation between the degree of independent director network of private listed companies and the financial flexibility of the companies is stronger.In addition,through the further analysis,we find that:If the companies are in different scales,the independent director network has different effects on the financial flexibility.The research results of this paper can rich the research on independent directors,social networks and financial flexibility,they are also meaningful in both theory and practice.