The Impact Studies Of Independent Directors On China's Financial Industry Operating Performance Of Listed Companies

Independent director system has always been the focus of public attention. In theory, the independent director system can contribute to improve the overall image of the company, and the independence and professional of the independent directors can strengthen the company's effective supervision, making plans for the company, protecting interests of shareholders. For financial sector, which has high risk and debt ratios, corporate governance is also very important, the effectiveness of Independent director system of finance listed Companies is worth our study and discussion.Independent director system has been studied extensively both at home and abroad, involving the independence of independent directors, the appointment mechanism of independent directors, compensation design and incentive mechanism of independent directors, the relationship between independent directors and corporate performance, the problem of independent directors and the truth of financial information, the relationship between independent director system and the Board of Supervisors. The research has made some meaningful results, but the impact of independent director system in China has not yet reached consensus.In foreign countries, the introduction of independent director system is from company's proxy. Independent directors were given general responsibility of fiduciary, loyalty and diligence, and the special responsibility involves supervision of management, providing reasonable recommendations, making objective evaluation of the Board of Directors, enhancing the company's reputation, and the right of information, supervision, auditing and voting. In the UK and other countries, independent directors are usually perform their duties in professional committees, such as the Nomination Committee, Remuneration Committee, Audit Committee, Executive Committee and public policy committees, which reflects the professional and supervisory of independent directors, and affecting operating performance of listed companies. Generally the corporate governance of independent directors is driven by reputation mechanism which independent directors pay attention to. At the same time, incentives such as salaries, stock ownership is another power for the regulatory of independent directors. Therefore, independent directors have incentive to play an active role in management in theory. However, due to the biases in nomination and selection of independent directors, and the restriction of information accessing, expertise and energy, the validity of independent directors in the performance of listed companies is constrained.In recent years, China's relevant departments have developed Guidelines Ordinance specifically for financial industry Independent Director System in China. From the current situation, the independent directors of financial sector can meet the basic requirements in China. But disclose information of independent directors is not much, roughly divided into guidelines views of independent directors, resignation notice and work report. And disclose information of work report is weaker than others.Making A shares of financial companies, which listed on Shanghai and Shenzhen Stock Exchange before December 31, 2006, as initial sample, and removed all the ST and * ST companies. Selecting data from 2007 to 2009 as panel data, and make empirical research which system of independent directors of listed financial companies affect results of operations. The empirical results show that company performance, the proportion of independent directors, and the remuneration of independent directors are negatively correlated. At the same time, performance of listed financial companies is affected in two cases: the major shareholders are state-owned and the two part-time jobs of company's chairman and CEO.Although financial listed companies have established independent director system, which is in line with relevant laws and regulations in China, the empirical results show that the independent director system in financial sector does not have positive impact on operating performance in China. This may because some factors limit the effect of independent director system of financial sector in China, and the factors involve that the relevant law is not perfect, the independent directors is not clear positioning, the run framework and evaluation system are imperfect, and information asymmetry. This also shows that independent director system of financial sector in China is still in the stage of compliance management, it can only meet the mandatory requirements of governance, and it is not achieve self-governance stage. To enhance the positive impact of the independent director system, it is need to improve the legal system of independent directors, strengthen regularly report of information disclosure, and improve the incentive and restrictive mechanism of independent directors.