Fang Hu - Academia.edu (original) (raw)
Papers by Fang Hu
SSRN Electronic Journal, 2009
This paper investigates the replacement and appointment of top executives in a business highly in... more This paper investigates the replacement and appointment of top executives in a business highly involved by the government and their consequences on firm performance and corporate governance. It provides a dynamic setting to test the value of political connection as prior studies do not discern government interests and incorporate ambiguous institutions and self-selection problems by cross-section test. Using data of China's listed state-owned enterprises (SOEs), this paper finds that the state owner is more likely to replace top executives and appoint a politically-connected executive when SOEs encounter economic distress such as poor ROA, earnings loss, high financial risk, or political distress such as SEC regulation violation. It implies that the politically-connected executive may be considered helpful by the government in response to firm distress. Further, it is found that the political top executives improve firm performance following their appointments and reduce the frequency of executives' illegal actions, by initiating modification of internal governance structures and mitigating manager's discretion. And those firms do not have preferential access to resources or government assistances such as fiscal subsidies, tax benefits, or the credit market. All these findings support that political executives could serve as a disciplinary or monitoring mechanism in a political economy lack of external market for corporate control and legal protection for investors, instead of being only a form of bail-out. Their efficacy is based on their administrative power, regulatory expertise and accountability to the government interests. These results provide better understanding of government interests and their impact on corporate governance.
The International Journal of Accounting, 2012
Using a sample of 916 Chinese listed state-owned enterprises (SOEs) from 2001 to 2005, we find th... more Using a sample of 916 Chinese listed state-owned enterprises (SOEs) from 2001 to 2005, we find that the likelihood of top management turnover is negatively associated with firm performance, suggesting the existence of an effective corporate governance mechanism in an emerging economy that is highly controlled by government. We also find that the negative turnover-performance relationship is stronger when the SOE is held by the Central Government, is directly held by a local government, or holds a monopolistic position in a local economy or in a strategic/regulated industry. The results indicate that the market-based corporate governance mechanism that punishes top executives as a result of poor performance is not only used in Chinese SOEs, but is used more frequently when the governance control of SOEs is more intensive. Our findings support the notion that government control strengthens rather than weakens the turnover-performance governance mechanism. Our additional analysis shows that this complementary effect persists in regions that lack pro-market institutions such as investor protections and a functioning capital market.
SSRN Electronic Journal, 2012
This paper investigates the decision to appoint politically connected top executives to Chinese l... more This paper investigates the decision to appoint politically connected top executives to Chinese listed state-owned enterprises (SOEs) when they face distressful conditions and whether such appointments enhance or reduce firm performance and corporate governance in subsequent years. China is the world's largest emerging economy, and Chinese SOEs are under intensive state control and are obliged to draw on a less developed managerial labor market. Using data on the top-management turnover of listed SOEs from 2001 to 2005, we find that state-owned companies are more likely to replace top executives and appoint a politically connected executive when they encounter a distress such as poor ROA, an earnings loss, a high financial risk, or regulations violation. We also find that newly appointed politically connected top executives subsequently improve firm performance and governance structures and reduce the frequency of illegal action by firms. However, there is no evidence that newly appointed politically connected top executives benefit firms through affording them preferential access to resources or government assistance. The findings suggest that politically connected executives may be selected for the alignment of shareholders' interests and for their special managerial talent in emerging markets dominated by government ownership, and may display additional managerial productivity in such an environment.
Having a clear project definition is crucial for successful construction projects. It affects des... more Having a clear project definition is crucial for successful construction projects. It affects design quality, project communication between stakeholders, and final project performance in terms of cost, schedule, and quality. This paper examines the relationship between project definition and final project performance through a structural equation model comprising four latent constructs and six path hypotheses using data from a questionnaire survey of 120 general contractors in the Malaysian construction industry. The results show that in the study population all three items impact the project performance, but the link between design quality and project performance is indirect. Instead, the clarity of project definition affects project performance indirectly through design quality and project communication and design quality affects project performance indirectly through project communication. The primary contribution is to provide quantitative confirmation of the more general statements made in the literature from around the world and therefore adds to and consolidates existing knowledge. Practical implications derived from the finding are also proposed for various project stakeholders. Furthermore, as lack of the clarity of project definition is a very common occurrence in construction projects globally, these findings have important ramifications for all construction projects in expanding and clarifying existing knowledge on what is needed for the successful delivery of construction projects.
SSRN Electronic Journal, 2009
This paper investigates the replacement and appointment of top executives in a business highly in... more This paper investigates the replacement and appointment of top executives in a business highly involved by the government and their consequences on firm performance and corporate governance. It provides a dynamic setting to test the value of political connection as prior studies do not discern government interests and incorporate ambiguous institutions and self-selection problems by cross-section test. Using data of China's listed state-owned enterprises (SOEs), this paper finds that the state owner is more likely to replace top executives and appoint a politically-connected executive when SOEs encounter economic distress such as poor ROA, earnings loss, high financial risk, or political distress such as SEC regulation violation. It implies that the politically-connected executive may be considered helpful by the government in response to firm distress. Further, it is found that the political top executives improve firm performance following their appointments and reduce the frequency of executives' illegal actions, by initiating modification of internal governance structures and mitigating manager's discretion. And those firms do not have preferential access to resources or government assistances such as fiscal subsidies, tax benefits, or the credit market. All these findings support that political executives could serve as a disciplinary or monitoring mechanism in a political economy lack of external market for corporate control and legal protection for investors, instead of being only a form of bail-out. Their efficacy is based on their administrative power, regulatory expertise and accountability to the government interests. These results provide better understanding of government interests and their impact on corporate governance.
The International Journal of Accounting, 2012
Using a sample of 916 Chinese listed state-owned enterprises (SOEs) from 2001 to 2005, we find th... more Using a sample of 916 Chinese listed state-owned enterprises (SOEs) from 2001 to 2005, we find that the likelihood of top management turnover is negatively associated with firm performance, suggesting the existence of an effective corporate governance mechanism in an emerging economy that is highly controlled by government. We also find that the negative turnover-performance relationship is stronger when the SOE is held by the Central Government, is directly held by a local government, or holds a monopolistic position in a local economy or in a strategic/regulated industry. The results indicate that the market-based corporate governance mechanism that punishes top executives as a result of poor performance is not only used in Chinese SOEs, but is used more frequently when the governance control of SOEs is more intensive. Our findings support the notion that government control strengthens rather than weakens the turnover-performance governance mechanism. Our additional analysis shows that this complementary effect persists in regions that lack pro-market institutions such as investor protections and a functioning capital market.
SSRN Electronic Journal, 2012
This paper investigates the decision to appoint politically connected top executives to Chinese l... more This paper investigates the decision to appoint politically connected top executives to Chinese listed state-owned enterprises (SOEs) when they face distressful conditions and whether such appointments enhance or reduce firm performance and corporate governance in subsequent years. China is the world's largest emerging economy, and Chinese SOEs are under intensive state control and are obliged to draw on a less developed managerial labor market. Using data on the top-management turnover of listed SOEs from 2001 to 2005, we find that state-owned companies are more likely to replace top executives and appoint a politically connected executive when they encounter a distress such as poor ROA, an earnings loss, a high financial risk, or regulations violation. We also find that newly appointed politically connected top executives subsequently improve firm performance and governance structures and reduce the frequency of illegal action by firms. However, there is no evidence that newly appointed politically connected top executives benefit firms through affording them preferential access to resources or government assistance. The findings suggest that politically connected executives may be selected for the alignment of shareholders' interests and for their special managerial talent in emerging markets dominated by government ownership, and may display additional managerial productivity in such an environment.
Having a clear project definition is crucial for successful construction projects. It affects des... more Having a clear project definition is crucial for successful construction projects. It affects design quality, project communication between stakeholders, and final project performance in terms of cost, schedule, and quality. This paper examines the relationship between project definition and final project performance through a structural equation model comprising four latent constructs and six path hypotheses using data from a questionnaire survey of 120 general contractors in the Malaysian construction industry. The results show that in the study population all three items impact the project performance, but the link between design quality and project performance is indirect. Instead, the clarity of project definition affects project performance indirectly through design quality and project communication and design quality affects project performance indirectly through project communication. The primary contribution is to provide quantitative confirmation of the more general statements made in the literature from around the world and therefore adds to and consolidates existing knowledge. Practical implications derived from the finding are also proposed for various project stakeholders. Furthermore, as lack of the clarity of project definition is a very common occurrence in construction projects globally, these findings have important ramifications for all construction projects in expanding and clarifying existing knowledge on what is needed for the successful delivery of construction projects.