Network Infrastructure Development and Large Shareholder Expropriation: A Quasi-Natural Experiment from the 'Broadband China' Strategy

This study investigates the impact of network infrastructure development under the "Broadband China" strategy on large shareholder expropriation in Chinese listed companies from 2007 to 2021.Using a comprehensive dataset of 32,548 observations from A-share listed companies on the Shanghai and Shenzhen Stock Exchanges, the research draws on financial and corporate governance data sourced from the China Stock Market & Accounting Research (CSMAR) database.Employing a Difference-in-Differences (DID) methodology, the study finds that the "Broadband China" strategy significantly reduces large shareholder expropriation.This reduction is largely attributed to enhanced transparency in financial reporting and strengthened regulatory oversight, both made possible by improvements in network infrastructure.Additionally, the study delves into the moderating effects of internal and external supervision.Notably, network infrastructure exerts a stronger inhibitory effect on large shareholder expropriation in firms with weaker internal supervision-characterized by higher earnings management-and in firms with weaker external supervision, as evidenced by lower stock liquidity.These findings underscore the critical role of technological advancements in improving corporate governance and curbing opportunistic behaviors by large shareholders.The study offers valuable insights for policymakers, investors, and regulators, emphasizing the importance of developing advanced infrastructure to promote transparency and fairness in business environments, thereby fostering healthier economic growth.