Based On The Behavior Of The Independent Directors Resigned Media Supervision

As the domestic reform environment changes loose gradually and the marketcompetition becomes intense increasingly, media has the motivation to supervise theproblems in corporate governance in order to gain the social reputation and commercialinterests. The modern media has the right to guide social issues, its negative reports onthe company can be known by the public in a short time, and form certain prestigepressure to the client, therefore, academia generally think that the media can improvethe governance environment of corporate and protect the interests of investors as animportant external governance mechanism. This thesis attempts to verify whether thenegative reports can lead to resignation of independent directors, and this behavior isbased on the maintenance of reputation from the independent director’s perspective withthe sample data from Chinese listed companies.Taking the listed companies which were reported by the media in a negative lightfrom2007.7.1to2012.12.31as the sample, this article studies whether the independentdirectors tend to resign, if this is the case, calculates the resignation probability. In orderto achieve this goal, the thesis provides statistics on the number of negative reports andfocuses on four major securities news, meanwhile, classifies the content and approach.It discovers that121listed companies have the resignation behavior of independentdirectors after the negative reports within six months, accounts for44.32percent of273.The number of negative reports has significant positive correlation with the resignationprobability of independent directors, and the influence of media is bigger, the impact onresignation probability of independent directors is greater. It demonstrates that thenegative reports do cause the resignation of independent directors, and media plays therole of corporate governance supervisor actively, especially the influential media plays akey role. At the same time, the reports whose content constitutes serious violation to theinvestors and depth reports also display the remarkable governance effect. In addition,the number of part-time is significantly and positively related to the resignationprobability of independent directors, namely, the resignation probability of independentdirectors who pay more attention to reputation is greater. It proves that as far as theindependent directors, media supervision do plays a role in corporate governancethrough reputation mechanism.The innovation of this thesis shows, it empirically studies the effects of negativereports from the point of view of independent directors’ behavior directly, and investigates the role of reputation mechanism based on the sample data. Theconclusions, on the one hand, provide Chinese-style evidence for the research oncorporate governance role of media supervision that just emerges in the internationaltheoretical circles; on the other hand, also offer policy recommendations for transitioncountries’ supervision departments thinking about how to improve the corporategovernance, protect the interests of investors, guarantee the due rights of independentdirectors with the power of media in the case of imperfect legal system and marketmechanism. This study has important theoretical value and practical significance.