Legal environment, government support, and substantive vs. symbolic restructuring

Wang, Pengji, Mahmood, Ishtiaq, and Lu, Xiaohui (2011) Legal environment, government support, and substantive vs. symbolic restructuring. In: Proceedings of the 2011 Annual Meeting of the Academy of Management. From: 2011 Academy of Management Annual Meeting: west meets east, 12-16 August 2011, San Antonio, Texas, USA.

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Abstract

This study examines whether and how institutions matter in shaping firms' decoupling or symbolic actions through analysis of the adoption of substantive vs. symbolic restructuring programs by Chinese listed firms that are subject to delisting pressure in the period of 1998-2004. We argue that firms' decision to pursue more or less substantive restructuring would depend on the institutional environment within which they operate. The higher the level of institutional incongruence, the more likely it is for firms to decouple. In this case, decoupling is driven by firms' ability to arbitrage between local and central institutions. We conduct empirical analysis to investigate how firms' choice of substantive vs. symbolic restructuring is affected by (1) provincial-level legal environment, constructed by contract law, property law and enforcement, (2) provincial-level government support in terms of subsidies, preferential credit access, and local protectionism, and (3) the interaction of the two forms of institutions at the provincial level and the independence of auditors at the firm level. Results confirm the significant effects of local institutions on firms' restructuring decisions.

Item ID: 25735
Item Type: Conference Item (Presentation)
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Date Deposited: 12 Sep 2013 04:26
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1503 Business and Management > 150310 Organisation and Management Theory @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9104 Management and Productivity > 910402 Management @ 100%
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