| China promulgated the"guidance on establishing the system of independent director in the listing company"in 2001. It is a major reformation of corporate governance structure in our country to establish the system of independent director. Based on the perspective of agency costs, a series of studies on the relationship between independent directors and supervisor board be unfolded in this paper. The study could improve and develop the system of the independent directors and supervisor board in China's corporate governance structure. It has certain theoretical and practical significance.Features of independent directors and supervisor board are chosen as the major study object in this paper. The effects that independent directors and supervisor board have to agency costs are chosen as the contrastive evidence. Combined with the terms limits of independent directors and supervisor board, the relationship between independent directors and supervisor board will be analyzed in this paper. Based on the theory and empirical methods, this paper discusses the content above deeply and widely.There are four parts in this paper, including institutional background, theory basis, empirical study, conclusions and recommendations. At first, the different institutional backgrounds between independent directors and supervisor board at home and abroad are juxtaposed. Then the relationship of independent directors and, supervisor board and agency costs will be sorted. And then based on the perspective of the effect on agency costs, the relationship between independent directors and supervisor board is tested using empirical method. Policy recommendations are proposed at last, based on the practice of co-exist of independent directors and supervisor board in our country.We can get a conclusion through theoretical and empirical analysis. Independent directors played a more active role in reducing hidden agency costs. Large-scale independent directors can enhance the effect of supervisor board to reduce agency costs. But a large number of independent directors' meeting may lower the effect of supervisor board to reduce agency costs. The supervisor board didn't play an active role. Large-scale supervisor board can enhance the effect of independent directors to reduce agency costs. A large number of supervisor board's meeting may lower the effect of independent directors to reduce agency costs. Supervisor board played a more active role in reducing explicit agency costs. Large-scale independent directors can lower the effect of supervisor board to reduce agency costs. A large number of independent directors' meeting may lower the effect of supervisor board to reduce agency costs. The enhance effect between independent directors' and supervisor board means that there is rationality. But there are still problems between supervisor board and independent directors.According to the conclusion above, this paper argues that the construction of independent directors and the supervisory system should focus on the coordination between the two powers. Companies should take the initiative to coordinate the number of independent directors and the number of meetings with the Board of Supervisors. Independent directors and supervisor board should also fulfill their responsibilities, focu on communication and reduce conflict. |
