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Lookup NU author(s): Dr Vu TrinhORCiD
This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).
This study investigates the impact of ‘busy’ independent directors on corporate financial leverage. Using a sample of 3,321 Chinese listed firms from 2004 to 2019, we find that firms with busier boards tend to have higher leverage, with corporate tax avoidance acting as a mediating mechanism. Supporting the reputational incentive hypothesis, busy boards discourage aggressive tax avoidance strategies that would otherwise allow managers to accumulate excess cash reserves. Consequently, these firms become more reliant on external debt financing to meet potential investment needs. Our findings highlight the role of ‘busy’ independent directors in mitigating agency conflicts and shaping financial strategies.
Author(s): Trinh VQ, Li T, Ha O, Liu J
Publication type: Article
Publication status: Published
Journal: The Financial Review
Year: 2025
Issue: ePub ahead of Print
Online publication date: 24/02/2025
Acceptance date: 09/02/2025
Date deposited: 10/02/2025
ISSN (print): 0732-8516
ISSN (electronic): 1540-6288
Publisher: Wiley-Blackwell Publishing, Inc.
URL: https://doi.org/10.1111/fire.12434
DOI: 10.1111/fire.12434
ePrints DOI: 10.57711/enxk-at67
Data Access Statement: Data may be available upon reasonable request.
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