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Where western listing Corporation independent directors gap

Author: WangLingLi From: www.yourpaper.net Posted: 2007-11-19 09:23:04 Read:
, in western countries, the research of independent director system in
The independent director system in widely in western developed countries, mainly in the second half of the twentieth Century, and in most developing countries it occurs mainly in the nineteen ninties.Although the listing Corporation supervision institutions of other countries hold a positive attitude on the independent director system, but scholars study results but there is big difference.
Generally speaking, the positive role of independent directors is mainly reflected in the following aspects:
1 because of the supervision of the management is the major responsibilities of the board, part of the study focused on the company's performance is poor in the board of directors in the after replacing the role of CEOs.Weisbach (1988) study shows that independent directors, the board of the dominant will tend to be more able to replace the original CEO.Borokhovich et al (1996) and Huson et al (2000) found that, when the company performance worsens, the board of directors the dominant will be more inclined to hire new CE0 from outside the company, instead of promoting from within.
2.Byrd et al (1992) study shows that, when the board of directors of the company are controlled by outside directors, the company made the acquisition decisions tend to be more sensible.The independent directors of the proposal carefully review the equity investors are more optimistic about the actual purchase bidding.
3.Cotter et al (1997) study shows that, when the company become a takeover bid target, controlled by outside directors on the board of directors of the company for a supply of sth. will work harder, thus bring more shares to the shareholders of the Target Corp.
4.Deli and Gillan (2000) of the independent directors on the audit committee's role, its conclusion is consistent, the audit committee of the independent directors of the demand and the demand of accounting certificate.The audit committee and the company development opportunities for positive independent, and managerial ownership is negatively related to firm size and market financing, and the scale is related to.Chen and Jaggi (2000) studied non-executive directors in the company information disclosure of the role of independent.The results show that, the board of directors of the higher proportion of independent directors on information disclosure aspects.Their research also shows that, the independent directors proportion and financial information disclosure is positively related to.
Of course, not all scholars are so optimistic.They affirmed the role of independent directors at the same time, but there can be no relationship between the performance of the company and the independent director system.
Baysinger and Butler (1985) of the United States of America "Forbes" in 266 major Usa Inc board composition and research operations, use of supervisory directors as variables, the relative financial performance (i.e., ROE/ ROE) as the dependent variable, the regression analysis, his conclusion is to improve the independence the company did not improve the operation of the company, improve corporate governance standards.The supervisory board of high company, its performance is not good.Cox analysis of the survey made by the influence of the independent director, and then summarized showed no evidence of independent will influence the performance of a company's board of directors.Independent directors do not believe in what contributions.
Laura (1996) using the statistics of public data and empirical analysis of the relationship between the structure of board of directors and company performance, the conclusion is that, the overall performance of the proportion of the independent directors of the company have no relationship, so it can not explain the independent directors can enhance the performance of the company, improving corporate governance level.However, there is some evidence to support for certain transactions, some of the effects of the proportion of the independent directors.Conclusion and suggestion: "Laura is that the difficult decisions requires all companies must have a majority of independent directors will be harmful or beneficial to the company.In view of the existing data is so uncertain, before the law in strengthening the structure of board of directors issued, should be more consideration".
Bhagat and Black (1999) analysis shows that, in fact, there is no evidence that, independent directors of the exhibit better corporate governance behavior of most of the company.They found that, companies that at least half of the directors to be independent seemed not less than half of the company to perform better, in fact, the authors found some signs, only the 1-2 internal directors the board of directors, in fact than other companies in financial performance worse.
All told, not independent directors on day management company, board composition and corporate performance has no direct relationship.When asked the board on specific matters, such as the replacement of incompetent CE0, acquisition or takeover and other matters, the board of directors as the majority of the independent director of the decision is good for shareholders.As in the acquisition or takeover, the independent director independent opinion on important decisions, help to maximize shareholder value.
two, the system of independent directors and the listing Corporation and the gap between the practice of
1, legislative and regulatory gaps
From the experience of foreign countries, the status and role of independent directors are generally in the "company law" and "Securities Law" clearly defined, and then to the Listing Rules of the exchange.
However, the China Securities Regulatory Commission in August 21, 2001 issued "on the establishment of independent director system in the listing Corporation guidance" in the legal system with no legal status.In terms of Chinese independent director system, it should belong to the "company law" regulating range.But China "company law" had not stipulated the listing Corporation must establish the system of independent directors, but does not involve independent director proportion in the board of directors. In the.Chinese "company law" is based on the civil law the provisions of the company shall set up a board of supervisors, the board of supervisors in the board of directors, senior management personnel for supervision.
Therefore, if the listing Corporation in China to establish the system of independent directors and supervisors, will be in the organizational structure of the company's role and functions overlap or conflict.How to coordinate the relationship between independent directors and supervisors, needs to make clear provisions in the law, otherwise it will cause some confusion in practice.
Provide specific and clear the relevant provisions of the CSRC has no independent director on the right and right.The rights and duties, responsibilities, asymmetry of independent directors, the independent directors to play a role as expected.Lack of management incentive and restraint mechanism enough of independent directors, independent directors rights and responsibility ability not equal, the management to urge the independent directors exercise the right of supervision.
Thus, the lack of environmental laws, regulations lag, lack of supervision, is a big problem to the first face of independent director system in china.

2 independent directors and the gap between the nomination process
The mechanism of the independent director is to ensure that the key to the independent director independent personality and the right of independence.The independent directors currently produced by listing Corporation shareholders to the board of Directors recommended, also by large shareholders under the control of the board of directors "through collective discussion", after "alone big" under the control of shareholders will vote on admission.
Due to this way of independent directors in the exercise of supervision function, it does not mean that a large shareholder, independence and the loss of the exercise, the independent director system has become a kind of external decoration.
In addition, the current lack of independent director selection standards and specifications, operation difficulty is greater, according to what criteria for the selection of the independent directors, is a difficult problem at present listing Corporation.
3 independent directors own professional quality gap
Foreign listing Corporation to employ independent directors for many financial experts or management consulting experts, because it is difficult to imagine that a no company financial management or management consulting experience people can put forward pertinent suggestions of financial report, and the trap of insight to the development of the company.
While China's listing Corporation to employ independent directors are looking for celebrities, regardless of its own financial knowledge and the business management level.Shi Xinghui (2001) 104 independent directors in 52 Chinese listing Corporation were investigated, results showed that: from professional background, technical experts accounted for a total of 42.6%, the economic category accounted for 22.8%; from the occupation background, university teachers and researchers accounted for 47.6%, accounted for 22.3% of business circles, government officials and other accounts for 15.5%.
4 independent director salary gap
The salary system should play a role in encouraging, but don't make independent directors have attachment to the company, the independent director liability rationalization.From the international experience, independent director compensation consists of allowance and transportation allowance.In addition to salary reward and conference fees is obtained in the form of routine work of the board of directors of independent directors in cash, if working in professional committee, also can be the members of the Committee and conference fees.Some companies in addition to outside independent directors allowance, to offer stock options.Independent director's salary level has nothing to do with the performance of the company.
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