Research On The Impact Of Board Faultlines On Enterprise’s Going Concern Ability

With China’s economic development from high-speed development to high-quality development stage,enterprises are paying more and more attention to the continuous strengthening and deepening of enterprises going concern ability.All circles pay more attention to the sustainable operation ability of enterprises.Sun Nianrui,deputy director of the Supervision Department of listed companies of the China Securities Regulatory Commission,said that the CSRC will optimize the delisting standard,it will no longer simply examine the profitability of enterprises,but also focus on going concern ability.According to the article 12(2)of the Securities Law of the People’s Republic of China revised on December 28,2019,the public offering of stocks stipulated in the current securities Law shall be changed from "having sustained profitability" to "having sustained going concern ability ".It is self-evident to study the importance of business going concern ability.As the core of corporate governance,the board of directors exercises the functions of decision-making,consultation and supervision,and has an important impact on the future development of enterprises.Board faultlines will be divided into many subgroups,exacerbating the contradiction and conflict between subgroups and subgroups,so communication is effective across subgroups,the board fauitlines will affect the board internal team,exercise,in turn,affects the board decision,consulting and monitoring functions,ultimately affect business going concern ability?At present,there is no research in this respect,which is the core problem of this paper.From the perspective of corporate governance,taking China’s A-share listed companies from 2010 to 2019 as research samples,this paper discusses the relationship between the board faultlines and the going concern ability from theoretical and empirical perspectives respectively.It is found that there is a significant negative correlation between the board faultlines and the firm’s going concern ability.When other conditions remain the same,the greater the chairman’s power,the greater the negative impact of the board faultlines on the enterprise’s ability to continue operating.At the same time,this paper analyzes the mechanism of how the board faultlines affects the ability of going concern,and empirically tests the two mediating variables of board team communication and board effort,the results showed that degree of effort for team communication board and the board faultlines impact on the company’s ability to continue as a going concern in the mediation conduction effect,As a result,the operating efficiency of the board of directors is reduced and the ability of enterprises to continue operating is weakened.In addition,heterogeneity test is conducted based on whether the observed values are stateowned enterprises and first-tier cities.The study finds that the board faultlines in non-stateowned enterprises and enterprises in first-tier cities has a more significant negative correlation with the sustainable operation ability of enterprises.This study enriches the research on the economic consequences of the board faultlines,expands the analysis of the factors influencing the enterprise’s going concern ability,and deeply explores the influencing mechanism between the board faultlines and the enterprise’s going concern ability.According to the results of empirical research,this paper provides investors and regulatory authorities with a new way to judge the ability of enterprises to continue operating,and shareholders with a new way to optimize the board of directors team.