Board Network and Accounting Policies'
Convergence: Evidence Based on Implicit
Decision of Development Cost in China

YONGTAO LIU
（Capital University of Economics and Business）
YUNSEN CHEN
（Central University of Finance and Economics）
DEREN XIE　DENGJIN ZHENG
（Tsinghua University）

Abstract　Being an important node of board network, interlocking directors is the information bridge of different firms, and can have a convergence role to those corporate policies. The policy choice of development cost in China is professional and doesn't belong to public information, which makes it the best opportunity to investigate board network's information transfer. Both considering board director's interlocking itself and director's position in network's centrality, we study how the firm's development cost choice policy is diffused through board network in different years. The empirical results show that, if one firm has selected the capitalization choice of development cost and this firm's directors sit in other firms' board at the same time, then the target firm with the same interlock directors has more probability to implement the same policy, this result is more obvious in independent directors sample; also, if the target firms' independent directors' network centrality is larger, then the firm has more probability to implement the development cost policy. The results suggest that because of the existence of information transfer channel and learning effect, different firms' accounting policies could be convergent.

Key words　Board Network, Interlocking Directors, Independent Directors, Accounting Policies, Capitalization of Development Cost