An Empirical Study On The Characteristics Of Independent Director And Corporate Performance

The independent director system is born dating back to the 1930s'Unite States of American, whose original intention is to solve the problem of"inner circle control"under the separation of"Property rights"and"Operating rights". After the separation of"Property rights"and"Operating rights", the operator of the company are not necessary to be the company's owners. Once upon the time, it is the first major stockholder who operated the company, but as the company's expanding scale and the much more dispersed stockholder's rights, they take no interests and ability to operate large corporation. In order to adapt to this change, general meeting of shareholders was held to select someone to form the board of directors, which has the rights to operate and select professional manager to operate the company. In general, the general meeting opens once a year. So the operators have taken enough freedom during the span. In order to lessen the influences of information asymmetry, the independence of the board should be enhanced. This is the reason for the US to introduce the independent director system. Since 1890s, the problem of"inner circle control"began to appear in many countries. The independent director has been widely accepted.In our country, there are many problems in the listed company except"inner circle control", such as"one share dominating". Although our country adopt two orientations of corporate governance mode, the board of supervisors has not played the role as the way they should have, such as the company's whitewashing and doing fake accounts to associate transaction,shift company's assets,internal business,exchanges of big-sum money and so on. All these bad behaviors have done harm to the investors'benefits and attacked their confidence. Under this condition,our country introduces the independent director system in order to clear corporate government. On Aug.16th 2001, China Securities Regulatory Commission issued the Guidelines for Introducing Independent Directors to the Board of Directors of Listed Companies, which symbolizes the beginning of the independent director system in our country.There have been 6 years since the beginning of the independent director system in our country. During this period, there has never stopped the arguments. In abroard, the"Enron Sacndal"causes the suspicion of the function of independent director system. In domestic , there are also many financial scandals ,more and more independent directors have not played surveillance function. to some extent ,the independent director system has even played a vital role in the clearing of corporate governs. During these years, we have to pay much more attention to the present situation and the change of the independent director system; Whether the independent director system has influence on corporate performanceor not; What characteristics of independent director can enhance corporate performance.Previous empirical study of independent director system mainly focus on the number or ratio of the independent directors. There shorts of the study of the relationship among the other characteristics of them to corporate performance ,such as the salary, gender, age of them。The purpose of this paper is to make an empirical study between the other independent director's characteristics and their corporate performance.The content and structure of this paper——The first part is the introduction. This part includes the background and sense, the mentality and the method, the content and structure, the contributions and insufficiencies of the study.The second part is the summary of the study in independent directors Including the abroard and domestic .The third part is the empirical analysis .In this part, we choose all the listed corporate of the year of 2004, 2005 and 2006 as the samples, then make a regression analysis under 7 hypothesis. The fourth part is the conclusion and suggestion.The conclusion shows that although the independent director ratio is not remarkably positive relevant to corporate performance, the other characteristics, such as salary, the average number of corporate which one independent director accepts, attendance rate, are remarkably positive relevant to corporate performance. The characteristics of home place, gender, age have not taken remarkably relevance to corporate performance. There are two new accomplishment of the paper .First, we study the independent director system and corporate performance from the angle of the independent director's characteristics .Second, we find the variables of the independent director's characteristics as many as possible. This paper also has its insufficiency , such as the limited variable of the characteristics, the single variable of corporate performance, and some influent factors are not efficiently deleted, the suggestion of improvement measure are insufficient.