A Study On The Effectivity Of Internal Supervision Mechanism In Chinese Listed Company

According to the company law of China, the board of supervisors within listed companies is set to bring into play its supervisory role effectively so as to improve company management situation and the marketing system. However, since its establishment, it has not been serving its function as effectively or independently as expected, which leads to great doubt of the rationality of its existence. Meanwhile, the independent director system, which origins from American and Britain and is still new to Chinese companies, has been playing an increasingly important and effective role. In spite of this, both theoretical and practice circles has not formed a specific orientation towards the position of the internal supervision mechanism mode of Chinese listed companies. System is set to reduce cost and improve efficiency. To bring into play the use of a system, there must be a clear mode of it. Different from previous studies, this text selects 467 listed manufacturing companies from A share market of Shanghai and Shenzhen Stock Exchange. Firstly, describe and analyze the token of the board of supervisors as well as the independent director system and their relationship with company performance contrastively so as to obtain some data characteristics about these variables. Secondly, make principal component analysis on the token of the board of supervisors and the independent director system respectively, and then use both overall evaluating indexes to establish a regression model with company performance. The outcome is basically identical with the result from numerous scholars. Namely, the board of supervisors has no apparent relativity with company performance while the independent director system can improve company performance evidently. Based on the outcome of the above empirical analysis, this text believes that under the interaction of the structure of law, market environment and company actions, the internal supervision mechanism in China should orientate towards the independent director system. That is, cancel the organization of the board of supervisors but preserve its necessary power and transfer them to the board of directors so as to improve the independent director system. With regard to how to improve the independent director system, there are some conception in the end. The text has also pointed out that under current condition, it is unpractical to depend totally on the independent director system to improve the management situation of Chinese listed companies, and the board of supervisors and the independent director system would still coexist for a long time.