Abstract

https://ssrn.com/abstract=2774239
 


 



Allocation of Decision Rights between the Parent Company and Its Subsidiaries


Yuanyuan Liu


Peking University - Department of Accounting

Ting Luo


Tsinghua University

Heng Yue


Singapore Management University - School of Accountancy

May 3, 2016

Journal of Accounting, Auditing & Finance, Forthcoming
Singapore Management University School of Accountancy Research Paper No. 2016-52

Abstract:     
This paper examines the determinants of allocation of decision rights between the parent company and its subsidiaries, and the economic consequence of suboptimal power structure. Based on China’s unique double-disclosure for the parent company and the whole group, we construct a decentralization index to measure how decision rights are allocated within the group companies. We find a more decentralized (centralized) power structure for the groups with more uncertain (certain) external environment and with poorer (better) internal information quality. We also show that the groups with suboptimal power structure have weaker future performance.

Number of Pages in PDF File: 42

Keywords: Decentralization, Power Structure, External Environmental Uncertainty, Internal Information Quality, Performance


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Date posted: May 4, 2016  

Suggested Citation

Liu, Yuanyuan and Luo, Ting and Yue, Heng, Allocation of Decision Rights between the Parent Company and Its Subsidiaries (May 3, 2016). Journal of Accounting, Auditing & Finance, Forthcoming; Singapore Management University School of Accountancy Research Paper No. 2016-52. Available at SSRN: https://ssrn.com/abstract=2774239

Contact Information

Yuanyuan Liu (Contact Author)
Peking University - Department of Accounting ( email )
Beijing, 100871
China
Ting Luo
Tsinghua University ( email )
Weilun #201,School of Economics and Management
Beijing, 100084
China
Heng Yue
Singapore Management University - School of Accountancy ( email )
60 Stamford Road
Singapore 178900
Singapore

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