Independent Directors' Ranking And Corporate Agency Costs

In China,the independent director system as an "imported product" has been questioned.One important reason is that independent directors usually nominated by management and major shareholders,which makes the independent directors lose their independence.Therefore,the independence and discourse power of independent directors is an important guarantee for their governance.In this paper,the author tries to measure the discourse power of independent directors by independent directors,ranking,and then empirically test the influence of independent directors'power on the supervisory role from the perspective of agency cost.Specifically,this paper takes 19,103 annual observation samples of Chinese A-share listed companies from 2004 to 2017 as the research object,manually collects and collates the ranking data of independent directors.Finds that the higher independent directors'ranking,the lower dual agency costs.This shows that high-ranking can help independent directors restrain the agency behaviors of company insiders.This paper also finds that the relationship between independent directors'ranking and the dual agency costs will vary in soe&nsoe.After the endogeneity robustness tests,using alternative variables and exogenous conflict of No.18 of the Central Committee,the conclusion is still robust.The research has important theoretical value and practical significance.Firstly,individual characteristics and background experience of independent directors has become a hot research topic in recent years,this research can expand and enrich the independent directors research field.Secondly,according to the conclusion,independent directors,ranking as an explicit information,can help investors,shareholders and supervision better identify the seriousness of the agency problem and improve the efficiency of decision-making.Thirdly,this conclusion can provide valuable policy reference for revising and improving the independent director system in China.