Research On The Relationship Between Functions Of Independent Directors And Corporate Performance On The GEM

The end of last century, China introduced the independent directors system for a perfect governance structure of listed company.In the independent directors system, the functions of independent directors play an important role in inhibiting the financial fraud, compression of earnings management space, enhancing the reliability of financial information to improve the company performance effectively. In addition, China’s GEM market is an important complement motherboard market. Since its establishment of late, the system is not perfect; Academia focus on researching the performance of listed corporation on GEM. Therefore, the study of the relationship between GEM independent directors and corporate performance of the functions is of great necessity. It’s of great significant in helping the independent directors’function effectively and enhancing the company’s performance by exploring the relationship; it would provide a theoretical reference for improving the independent directors system in China.In order to research the relationship between functions of independent directors and corporate performance on the GEM, this paper adopts the method combing the literature research method and multiple regression analysis method. On the one hand, this paper combs the literature of independent directors, and proposes hypothesis by analyzing the mechanism between the function of independent directors with corporate performance. On the other hand, this paper builds regression models and selects the indicators which measure the functions independent directors and corporate performance.Finally this paper analysis the relationship between independent directors and corporate performance by multiple linear regressionThe results show that the supervise functions and providing resources function of independent directors contribute to the company performance improvement. Its proportion of part-time shows a significant positive correlation with the corporate performance as well as its salary levels, while the proportion of independent directors show that a significant negative correlation with the corporate performance. The independent director’s academic institutions background, financial management background and government background are all beneficial to promote corporate performance. China’s listed companies should pay attention to independent directors as a positive role in increasing corporate performance, confirm the functions of independent directors that create a favorable environment for the full play of independent directors so as to effectively improve the corporate governance structure and achieve the objective of enhancing corporate performance.