The Moderating Role of Checks- and-Balances and Monitoring Mechanisms in the Degree of Strategic Aggressiveness - A Case Study of Chinese Listed Software and IT Services Industry

Abstract

Due to several cases of bankruptcy caused by uncontrolled corporate expansion due to rapid economic development in China in recent years, this paper takes listed companies in China's software and IT service industry as a research sample from 2018-2021 and uses PROCESS V3.5 developed by [1] to explore the moderating effects of checks-and-balances and supervisory mechanisms on the degree of strategic aggressiveness. Among the check-and-balance mechanisms include the degree of separation of powers, the degree of equity checks-and-balances, the ratio of independent directors, and duality. Based on the empirical results, two conclusions of this paper are summarized: 1. The degree of separation of powers has a positive moderating effect on the degree of strategic activism and investment efficiency, especially when the degree of separation of powers is at a low to medium level. 2. When the general manager and the chairman of the board of directors are the same person, there is a negative moderating effect between the degree of strategic aggressiveness and investment efficiency. The higher the degree of strategic aggressiveness, the investment efficiency will be significantly reduced if the chairman and general manager are combined into one person. Based on the above research results, this paper puts forward corresponding suggestions for enterprises.