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Voluntary disclosure of the independent directors of listed companies

Author: ChangYanLi From: www.yourpaper.net Posted: 2009-04-02 20:44:10 Read:
Abstract: With the deepening of the split share structure reform of listed companies, the company's voluntary disclosure growing concern of the theoretical and practical circles of independent directors as a representative of the interests of small investors, should play a positive role in the company's voluntary disclosure role in promoting However, the empirical analysis results show that the independent director system in China is not voluntary information disclosure of listed companies play an effective role in promoting a main reason for this result is the independent director system in China within external control mechanism is not perfect, therefore, improve the relevant laws and regulations of the independent director system, improve the professionalism of the independent directors, improve the independent directors of the independent directors of the external control mechanism functioning and improve the performance of listed companies play a positive role in promoting .
Keywords: independent directors; disclosure of information; listed companies

I. Introduction

In recent years a series of corporate fraud cases occurred, the confidence of investors by a large degree of influence after the securities regulatory authorities have issued the relevant laws and regulations to strengthen the company's mandatory disclosure, however, mandatory information can only guarantee a basic understanding of the investors in the company, is insufficient to meet the comprehensive information needed for decision-making of investors, therefore, more and more listed companies in order to promote effective communication with investors and other interested stakeholders, beginning in Mandatory disclosure of information other than the spontaneous provide more information. "OECD Corporate Governance Principles provide that the Board should regulate the disclosure of information and communication process, supervise and manage potential conflicts between management, board members and shareholders , the content and accuracy of the information disclosed by the Board of Directors of the Company is responsible for. However, when the Board "internal control, often can not objectively evaluate the results of the management of the Company, resulting in inadequate information disclosure and independent directors independent of the company's management can be more impartial monitoring of the management to reduce the information asymmetry between managers and owners. This paper attempts to study the relationship between the proportion of independent directors and the company's voluntary information disclosure, independent Director System in China's role play to evaluate and make recommendations accordingly.

Second, the literature review

Fama and Jensen (1983) and Williamson (1984) found that the role of independent directors on the company's voluntary disclosure, however, the independence of the board, and the relationship between the voluntary disclosure until the end of the 20th century before becoming the academic community research focuses some scholars findings show that there is a positive correlation between the proportion of independent directors and the company's voluntary disclosure, such as Chen and Jaggi (2000) pointed out that the increase in the proportion of independent directors to cause the company to be disclosed in the annual report more a wide range of financial information to increase the accuracy of the financial information. Horwitz (2004) study found that there is a positive correlation between listed companies holding less than 25%, the independence of the board of directors and the company's voluntary disclosure of information. Barako , Hancoock, and at Izan Leung (2006) findings of listed companies in Kenya also prove, proportion and company voluntary information the disclosure of non-executive directors was a significant positive correlation relationship. however, Forker, (1992) the voluntary disclosure and Study on the relationship between corporate governance, there is no correlation between the independence of the Board and Voluntary Disclosure (Ho and Wang, 2001) In addition, some scholars found that the company's voluntary disclosure and independent directors ratio between the negative correlation (Eng and Mak 2003, Gul and Leung 2002). the Chinese scholars shorter the time of the Company's voluntary disclosure of information, relative lack of relevant literature. Qiao Xudong (2003) by affecting listed companies voluntarily Analysis pointed out, between the degree of company voluntary information disclosure and independent directors of the proportion of positive correlation relationship (Du Shujie, 2004; to Kay, 2006). while Li Yu Xiang (2004) study the display, voluntary disclosure of sexual disclosure of certain factors with the independent directors of the Board of Directors in the proportion of non-significant correlation. David Chung, day-Xi Zhang, Zhang Yanni (2006), the study also showed that, the presence of independent directors did not Listed Companies in China voluntary information disclosure level produce a significant positive impact.
At present, domestic and foreign scholars relationship between the proportion of independent directors and the company voluntary disclosure and there is no uniform conclusion. This is mainly due to the construction of the independent director system is a long process, to play the role of system is not only dependent on the independent director system their degree of perfection, but also depends on the mechanism of sound or external constraints. Therefore, this paper will use the latest data of listed companies in 2006 on the relationship between the proportion of independent directors and the company's voluntary information disclosure further tests, and Independent Director System in China improve further recommendations.

Third, empirical testing and analysis

(A) the assumption that
The independent directors are generally experts in various fields such as economic, legal, effective supervision, improve the efficiency and accuracy of decision-making on the management of the Company, the proportion of independent directors is an important indicator to measure the effectiveness of the Board. Fama and Jensen (1983) that independent directors can effectively reduce the agency problems caused by conflicts of interest between owners and managers. Franks (2001) also pointed out that can effectively improve the monitoring and balancing role of independent directors in the board of directors, the Board of Directors effective . improvement of the effectiveness of the Board to encourage enterprises to more disclosure of information, better protect the interests of shareholders and small investors., Forker, (1992), the higher the proportion of independent non-executive directors in the board of directors, the more they can strengthen monitor the quality of financial information disclosure to reduce managers retain information and get the benefits, so you can make the assumption H1: the proportion of independent directors and the company's voluntary disclosure of a positive relationship.
Degree of voluntary information disclosure of listed companies will be some of the characteristics of the company, and, in the summary of the previous literature on the basis of the combination of listed companies in China to select the size of the company, profitability and corporate ownership concentration as control variables.

(B) research methods
(1) sample selection
In order to avoid Issuance categories, as well as the industry's voluntary information disclosure quality of the paper selected for the sample of A shares listed on the manufacturing company. Data from the GTA database, CHINF and deep, Statistical Yearbook of the Shanghai and Shenzhen Stock Exchange Industry Classification Standard according to the China Securities Regulatory Commission issued in 2001 listed companies Industry Classification Guidelines. selected samples must meet the following three conditions: (1) must be listed before 2003 (including 2003), to prevent time-to-market information disclosure; (2) is not ST, PT company, ST and PT due to poor operation and often even the basic mandatory disclosure is difficult to guarantee more difficult to carry out the voluntary disclosure; (3) to provide a complete 2006 Annual Report of the deep, manufacturing listed companies listed in the Shanghai and Shenzhen A-share listed companies before 2003 770 (the data source CHINF), 665 meet the above criteria, random sample of 187 reason choose one year of data, because the same information to be disclosed to the characteristics generally do not change over time, at the same time, the Securities and Futures Commission (SFC) published in 2005, the latest public offering of securities of the Company disclosed the content and format of -2 "Therefore, choose 2006 listed companies as samples, the use of the SPSS14.0 empirical analysis (2) variable design
The variables used in this article from the listing of the Company's 2006 Annual Report and the GTA database refers to the proportion of independent directors is the proportion of independent directors in the board members, INB company size measure Ln in the form of the company's total assets , which means that as LNSIZE. performance of the company net profit divided by shareholders' equity by the end of 2006, taking into account for the ROE ownership concentration, referring to the shareholders of the manifestations of equity stake centralized or distributed quantitative indicators, we use square of the ten largest holdings stake in the company and said that counted as HEFD10.
(3) voluntary disclosure index
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