The Impact of the Dual Board Structure and Board Diversity: Evidence from Chinese Initial Public Offerings (IPOs)
28 Pages Posted: 1 Jun 2014 Last revised: 16 Sep 2017
Date Written: May 1, 2014
Chinese listed companies have a two-tier (dual) governance structure that comprises a supervisory board/committee (SB); and the board of directors (BoD). However as there is no hierarchical relationship between them, the two boards are independent. This is different from the governance mechanism in continental Europe in which the SB appoints the directors of the management board, in this sense the Chinese two-tier governance structure is unique. We investigate the corporate governance and diversity characteristics of the two boards for a sample of 893 Chinese Initial Public Offerings (IPOs) floated during the period 1999-2009. We find that the average proportion of female directors and female SB members on the BoD and the SB are 10% and 16% respectively. Similarly, the percentage of directors with postgraduate qualifications e.g. Masters and PhD degrees are 23% and 9% for the BoD and the SB respectively. Using both static and dynamic panel data methods, we find that there is no significant impact of corporate governance characteristics on gender diversity in China. Interestingly, companies with high financial performance are likely to appoint female directors. Meanwhile we find a negative and significant relationship between the percentage of state ownership and the proportion of female directors.
Keywords: Board diversity; corporate governance; two-tier board; Initial Public Offerings (IPOs); China
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