Compliance Or Resistance? Political Ties And Board Independence In An Emerging Economy

We examine the relationship between political ties and board independence in emerging economies, distinguishing ties to government administrators and legislators. We proposed and found that ties to government administrators lead to more independent directors, while ties to legislators lead to fewer independent directors than their unconnected peers. We further explored the external and internal forces that may moderate these relationships. We found that firms’ exposure to global capital market weakens the effects of both types of ties. Embeddedness in family governance system strengthened the negative effect of legislative ties, but does not have an impact on administrative ties.