| A good internal supervision system within a listed company is useful to control operating risks,protect the rights and interests of small and medium investors,and can also provide a stable and positive economic environment for the entire market.In China,the Board of Supervisors functions as a company’s supervisory body.After the failure of the Board of Supervisors.The introduction of an independent director system created a situation where two supervision mechanisms coexist within China’s listed companies.But the internal supervision still has not achieved the expected monitoring effect.In the cases of frequent financial fraud and false disclosure,few companies have achieved internal supervision.However,in recent years,new situation arises in internal supervision practice.Independent directors have gradually begun to shake off their useless image and have started to play an active role in corporate governance.The number of cases where they raise objections or vote in the board of directors has increased,they are playing more and more significant role in corporate governance.This article attempts to analyze the problems caused by the repeated setting up of the supervisory board and independent directors in listed companies.Combining the actual situation of internal monitoring practice,this article explores new settings of the internal monitoring mechanism of listed companies in China.This article also use the new development of US independent director system as a reference to provide ideas for the perfection of internal monitoring mechanism.The article is divided into five parts:The first chapter introduces the internal monitoring mechanism of Chinese and foreign listed companies,briefly introduces the supervisory board system represented by German corporate governance,and the independent director system adopted by American listed companies.And then introduces the "dual-core" internal monitoring form in China,in which the supervisory board and independent directors coexist.In the introduction of the Chinese system in the last section,it analyzes the historical background of the formation of China’s special monitoring mechanism and the legislative purpose.And the legislative purpose has not been achieved,these two systems has not succeeded in achieving complementarity,nor have they improved the effectiveness of supervision.At the end of this section,the author introduces three opinions of the internal supervision model of listed companies in China.The first is to continue the "dual-core" model,the second is to end the mandatory "dual-core" model and give the company the right of choice,and the third is to end the "dual core" model and choose one of the systems to improve.The third opinion includes the distinction between the selection of the supervisory board or independent directors.The author agrees to end the "dual-core" supervision and choose the independent director system for further perfection.This view is derived through a two-step analysis.The first step is to end the "dual-core" supervision.The second step is to choose the independent director system.The second chapter of this article analyzes the first step,and the third and the fourth chapters analyze the second step.The first chapter is a steppingstone for the full article.The second chapter discusses that the “dual-core” internal monitoring mechanism should be ended.The first section of this chapter states that the "dual-core" monitoring system itself has many problems.The overlap of the duty of board of supervision and independent directors leads to inefficient of monitoring.The responsibility boundary of these two systems is obscure,increasing difficulty in accountability.The operating cost is increased because of the duplication of the internal monitoring systems.The second section of this chapter analyzes that it is difficult to perfect the system no matter in theory or in practice.So it is concluded that listed companies in China should stop using the coexistence model of two monitoring mechanisms.The third chapter analyzes the relationship between the supervisory board and independent directors.The current situation shows that the selection of an independent director system is more suitable for China.The first section of this chapter uses path dependence theory to explain the reasons why the board of supervisors still exists in China.This section distinguishes different subjects by explaining from the perspectives of the legislators and major shareholders.The path dependence because of effectiveness resulting from the sunk cost,complementarity and dependence on the path of legal transplantation,and the dependence of major shareholders is mainly due to rent-seeking.The second section analyzes that the path dependence on the board of supervisors will not continue.Because the effectiveness in practice is not high.Moreover,as a system of breaking the dependence,independent directors play a more and more significant role in internal monitoring,and the strength of breaking is enhanced.In addition,the increasingly fierce pressure of international competition has accelerated the broken of path dependence,and prompted China to choose the independent director system to gain a competitive edge in the world.The fourth chapter discusses some existing problems and some suggestions for improving the independent director system.Based on the analysis in the previous chapter,the independent director system should be selected and improved.The first section analyzes some existing problems of the independent director system,and the second section makes some suggestions for the improvement of the system.At present,the most discussed issue of the problem of the independent director system is its lack of independence.The reasons are the concentration of equity in listed companies in China,as well as the independent director system itself.The qualification requirements for independent directors,the appointment and removal mechanism,the proportion of directors in the board of directors,and the term of office will all affect independence.The academic community has already done a lot of research in this area.The author has not specifically carried out various existing studies.In recent years,the United States has developed new trends in the judgment of independence with influence of social relations.The author analyzes what we could learn from these new trends to improve the independent director system in China,which is deeply affected by social relations.In addition,in view of the problem of the lack of commercial experience of independent directors,the author acknowledges that this will indeed have a negative impact on the performance of independent directors,but believes that this can be solved by strengthening the communication between independent directors and ordinary directors.In the second section,the author also discussed the suggestions of using reputational incentives to enhance the enthusiasm of independent directors and using committees to strengthen the monitoring.The conclusion part summarizes the entire article.The choice of corporate governance model must fully respect the market situation,and the listed company cannot be placed in a high-cost and low-efficiency governance structure.Under the circumstance that the disadvantage of coexistence of the two systems outweighs the advantages,it is a useful method to end the situation of compulsory coexistence and Concentrate on improving the independent director system. |
