Study Of The Validity Of The Independent Director System

As main mechanism to supervise and control the superintendents' behavior, the board of directors plays an important role in issues of corporate governance. Generally speaking, researches in this field always concentrate on board size, leadership structure and independence of directors. Among them, independence of directors, especially, outside directors' effect on improving efficiency of board draws most attention of academia. For further consummating board function and perfecting the mechanism of corporate governance, China introduced independent director system and promoted it gradually. Consequently, arguments on this area were aroused. This article carried on theoretical analysis and empirical test on perfecting system of domestic independent director, trying to supply useful empirical evidence for reference.Using more than one thousand companies' data, 2002-2004, listed in Shanghai or Shenzhen Security Exchange, this article made empirical test on board size, fraction of independent directors, and other variables' effect on company achievements. The results indicated, under certain condition, board size and fraction of independent directors were positively related to company achievements, which suggested that expanding board size properly and fraction of independent directors was likely to improve achievements of listed company under actual condition.