Research On The Influence Of Non-executive Directors On Abnormal Corporate Donations

Enterprises are the main donors of charity in China,and their charitable donation behavior is a hot topic in the field of social responsibility research.Through appropriate donation,enterprises can establish a good social image,obtain the recognition of stakeholders and all sectors of the society,so as to enhance the value of enterprises.The abnormal donation that deviates from the basic characteristics of the enterprise and beyond the scope of the enterprise’s own economic strength will increase the extra cost of enterprise operation,produce negative externality,and reduce the interests of shareholders and enterprise value.Therefore,the shareholders require that the donation decision of the management should be adapted to the basic characteristics of the enterprise,so that the enterprise can avoid the dual conflict of charitable responsibility and economic responsibility.However,due to the fact that the management may obtain additional donation income in the enterprise donation activities,such as good reputation and social status,the abnormal donation behavior of the enterprise is usually regarded as the management’s "name by name" means to the enterprise,which is an opportunistic behavior of the management abusing the enterprise resources for personal gain.Therefore,enterprises need to establish a governance mechanism to supervise the abnormal donation behavior of the management,alleviate the conflict of interest between shareholders and management,and urge the management to make donation decisions from the perspective of enterprise profit maximization.The board of directors is regarded as the link between the shareholders and the management,playing the role of supervising the management.The members of the board of directors include executive directors,non-executive directors and independent directors.Previous studies on the board of directors are mostly limited to the governance effect of independent directors.However,in recent years,independent directors are called "vase directors",and their independence is frequently questioned.On the contrary,the nonexecutive directors appointed to the board of directors by superior units,major shareholders or other influential shareholders have stronger independence and supervision motivation,and their importance is gradually highlighted.Based on this,this paper decided to explore the supervision role of non-executive directors on the management’s self-interest donation behavior,and test the relationship between the proportion of nonexecutive directors and the abnormal donation level of enterprises.Firstly,this paper defines the concept of abnormal donation level and the proportion of non-executive directors,and reviews the literature on charitable donation and nonexecutive directors;Secondly,on the basis of principal-agent theory,information asymmetry theory and irrational decision-making theory,this paper puts forward research hypotheses;Furthermore,this paper takes the data of Shanghai and Shenzhen A-share listed companies from 2008 to 2019 as the sample,and uses multiple linear regression method to verify the impact of the proportion of non-executive directors on the abnormal donation level of enterprises;In addition,this paper also introduces the degree of equity balance,the integration of the board of directors and the general manager,and the nature of property rights as the moderating factors of the relationship between the proportion of non-executive directors and abnormal corporate donations;Finally,this paper uses a variety of methods for robustness test to increase the reliability of the conclusions of this study.The main conclusions are as follows:(1)There is a significant negative correlation between the proportion of non-executive directors and the level of abnormal corporate donations;(2)The high degree of equity balance weakens the inhibitory effect of nonexecutive directors on abnormal donation;(3)The combination of chairman and general manager weakens the inhibitory effect of non-executive directors on abnormal donation;(4)Compared with the non-state-owned enterprises,the non-executive directors in the state-owned enterprises have more obvious supervision and inhibition effect on the abnormal donation.Finally,combined with the research conclusions,this paper puts forward targeted countermeasures and suggestions from the government level and the enterprise level on the charity donation behavior of listed companies and the improvement of the board of directors.