A Study On The Validation Of Independent Director System In Chinese Listed Company

Independent director system is designed to improve corporate governance of Listed Companies in China, which curbs the concentration of Listed Companies, a high internal control and oversight mechanisms and other damage behaviors of small shareholders, forming an effective supervision and control effect on large shareholders. After all, independent director system originated in the western developed countries. From the introduction of independent director system in China until now, the "localization" process is still being widely contested. Therefore, the research of independent directors'effectiveness of listed companies is necessary.According to the theoretical and empirical analysis of the results, we try to reform and improve the system of independent directors. Thereby establish an independent director of China's national conditions for corporate governance, and promote the construction of modern enterprise system.In this paper, we discuss the system of independent directors of listed companies in China through both theoretical and empirical aspects, using the comparative study, theoretical analysis, empirical and normative research combines qualitative analysis and quantitative analysis and the method of combining. First, we describe the system of independent directors on the basis of the development process, and analyze the concept of independent directors in three ways, such as the use of general type, listed in type and general type and list. Then we explore the general powers, responsibilities and the specific responsibilities of independent directors.Paper focuses on the literature review of Independent Director System in and abroad, and conduct a comprehensive analyses, mainly in the independent directors and company performance, as independent directors, independent directors and management relations, pay level and structure of the independent directors, independent directors and the company's ownership structure, independent directors and independent directors of the company to take over the best period of other aspects of the detailed classification summary of the independent director system to understand the history and theory of community concern perspective, the theoretical and empirical analysis of the back and lay a solid foundation. The development of independent director system has unique operating mechanism, a more theoretical basis of its survival and development.Principal-agent theory is generated by independent director system requirements, stakeholder theory reflects the existence of the independent directors of the value and role, incentive theory is more effective in promoting efficiency of the system of independent directors to play the source. We discuss domestic and international operating mechanism of the system from three angles. The first is selection mechanism. We analyze the qualifications, selection procedures and the proportion of settings. Second, incentive and restraint mechanisms, respectively, from Incentive approaches and Incentive portfolio; Third, professional committees, which defined the functions of various professional committees.The introduction of independent directors of listed companies has a process. From the first to set up an independent director to the laws regulating their status, the independent director system in China's listed companies has an initial development process. This paper introduced the status of independent director system in China from the proportion of independent directors, remuneration, status and professional committees set up, and trying to find some problems for improvement.Further, we select the sample from 2005 to 2008 among all companies listed in Shanghai and Shenzhen as panel model to test, testing the effectiveness of independent director system in China to verify the independent director system "localization" level from an empirical point, mainly from the independent directors systems and corporate performance, the independent director system constraints on the company's management and other aspects of the role. We select the index firm characteristics, board characteristics indicators, management indicators, the characteristics of the control variables, and try to study and pay the proportion of independent directors of listed companies performance and remuneration of managers, thus confirming the validity of the independent director system, and try to improve direction, and strive to theoretical system of scientific and practical. The results show that the proportion of independent directors and managers of the company's performance pay are very limited impact, but the pay levels of the independent directors of the company had a positive influence on performance, the Audit Committee, Remuneration Committee and Strategic Committee of the establishment of the company's performance have a positive influence, but the establishment of the Remuneration Committee and the managers pay is positively correlated.Finally, the independent director system in China still have some problems, we try to make recommendations and proposals for further improvement.