Study On Realization Process Of Board Function

Board as one of the most important internal mechanism plays an irreplaceable role in decision-making and control. In modern companies, the board was established to better deal with all kinds of contradictions and conflicts between shareholders, managers, and other stakeholders, so it can further improve the accuracy of decision-making.Over the years, board has become one of the hot topics. Literatures existing have focused mainly on the size of the board of directors, leadership structure and the independence of directors etc. With in-depth study, the focus gradually involves the conduct of the board, such as: the number of meetings, the meeting length. Although this makes the study more closely the practice, but it still based on some observable characteristics and not really related to the core functions of board. In fact, the various structures and mechanisms of the board are aimed at more scientific decision-making and supervision. Therefore, the research about how different boards structures run in this process, and the roles they played in the process is the purpose of analysis, and also the focus of this article.This paper taking the functions of the board as the center analyses the different stages in supervision and decision-making process, and it also studies how the different directors, professional committees ensure the realization of these functions. In addition, from a lot of analysis we can see that the board functions of supervision and decision-making is not clearly separated, but integrated in the process when the board deal with day-to-day affairs, especially in the management of corporate strategy. However, through observation, we also found that the functions in different firm have different focus. Some are in favor of the decision making, while others prefer to management supervision.On the basis of the theoretical analysis, this paper takes the survey data in banking industry as the samples which is surveyed in Shandong Province in 2007 to examine the 126 rural credit cooperatives whether they perform the functions of the board, and factors that may affect this process. It is difficult to achieve information about the functions of the board, so most studies do not analyze this process. But because of the survey data used in this article, it can solve this problem. In this paper, empirical results show that the board characters, including size, independence and professional committees, have no significant impact on the board choice of the functions, but the decision-making board has decreased performance. This is due to that rural credit cooperatives, as small-sized financial institutions, its own management structure is not perfect, the board is controlled by insiders, and the supervisory role has not fulfilled; On the other hand, to perform the board functions is a very complex process , and need to continue to study the different stages of interaction.This article only carries on the general analysis about the function of the board, but for different industries, different regions and different companies, process of the board functions still have their own characteristics, and these questions are required to deepen in the future study. In addition, it should also examine larger samples coming from more industries in further studies.