Publication Type
Journal Article
Version
Postprint
Publication Date
7-2018
Abstract
This article 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.
Keywords
Decentralization, Power Structure, External Environmental Uncertainty, Internal Information Quality, Performance
Discipline
Accounting | Corporate Finance
Research Areas
Corporate Governance, Auditing and Risk Management
Publication
Journal of Accounting, Auditing and Finance
Volume
33
Issue
3
First Page
355
Last Page
381
ISSN
0148-558X
Identifier
10.1177/0148558X16648032
Publisher
SAGE Publications (UK and US)
Citation
LIU, Yuanyuan; LUO, Ting; and Heng YUE.
Allocation of decision rights between the parent company and its subsidiaries. (2018). Journal of Accounting, Auditing and Finance. 33, (3), 355-381.
Available at: https://ink.library.smu.edu.sg/soa_research/1553
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1177/0148558X16648032