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The independence of the independent directors influencing factors

Author: WangShuHui¡¡LiMeiGui From: www.yourpaper.net Posted: 2009-05-26 05:23:46 Read:
[Abstract] independent director system governance problems and the introduction of a mechanism as a listed company in China hopes to strengthen internal checks and balances and constraints, to safeguard the interests of all shareholders, improve the efficiency of corporate governance. But the fact is, the independent director system implementation of more than five years, did not play the desired effect, the independence of the role of independent directors has not been fully exploited. This article analyzes the factors that affect the independence of the independent directors, has also been discussed on how to improve the independence of the independent directors.
[Key words] INDEPENDENT DIRECTORS influencing factors

Independent director system in Britain and other Western countries, the formation and development of its specific background. In order to improve the efficiency of the governance of listed companies in China, more popular in foreign countries and achieved certain results of the independent director system was introduced in the governance structure of the domestic listed companies. Independent director system implementation of more than five years since the independence of the role of independent directors has not been fully exploited. Independence is the core and foundation of the system of independent directors and independent directors, the lack of independence of the independent directors, are fundamentally shaken this system was originally designed.
Two factors that affect the independence of the independent directors
1 independent directors election mechanism. "Dominance" of the shareholding structure, holding more than 50% of the voting rights of shareholders can control the Board of Directors appointed by the Board to nominate independent directors, independent directors will become a substantial shareholder "secondary vassal, independence out of the question.
On the other hand, the independence and impartiality of the premise of independent directors, independent directors suggestions or opinions contrary to the wishes of the large shareholders, management, it is likely to face the risk of removal. Statistics from the Shanghai Stock Exchange, serve or have served as an independent director of listed companies 4,000 people, 10% are non-normal leave; independent director upon exercise, may take into account their own interests, preferred to remain silent or not as. Thus, the independent directors exit mechanism is not perfect, will also affect the independence of the independent directors.
2 independent directors occupational background. According to statistics of the Shanghai Stock Exchange, ended in June 2004, the Shanghai and Shenzhen listed company's independent directors, more than half from accounting economic class professionals, 11% for the legal profession, 44% of university professors and experts and scholars; seen independent directors in listed companies in China talent source structure is not rational.
Qing-Quan Tang from an empirical point of view of the different professional backgrounds of independent directors and firm performance found, what kind of professional background of independent directors on the performance of the company for better performance; Only companies employ both from the business community, hire an independent director from the non-business community, have better performance and balanced, independent directors on company performance.
3 independent directors the right to know. Independent Directors in China according to the "Shanghai Securities News" Survey, 35% of those surveyed independent directors are not entitled to the same right to know, and the other directors or obtain enough support to make their own independent judgment. Even in the absence of intentional misleading and distorted information, decision-making and judgment of the independent directors are bound to be affected, independence difficult to really play. Independent directors through the introduction of enterprise managers and financial reporting to understand the company's largest shareholder control managers perspective enterprise, its independence is inevitable doubt.
Measures to improve the independence of the independent directors
Vision on the appointment and removal procedures of the independent directors. China introduced one of the main purpose of the independent directors, is that the behavior of the supervision and controlling shareholder and its agents; the appointment and removal of independent directors is not independent director candidates should be decided by the board of directors of the controlling shareholder or controlled, or the independence of the independent directors to people questioned.
In the election of independent directors, the industry association recommended the establishment of an independent director by the Association and selected by the Company in general meeting poll based on the basic situation of listed companies and their needs, the nomination initial independent director candidates; independent directors. In the election, we should give full consideration to the interests of minority shareholders, their participation to the election process of the independent directors; on the one hand, Belgium and other countries can learn from the practice of vote total, accounting for the number of votes of individual shareholders at the shareholders meeting the ratio of the number of votes to make specific provisions; the other hand, the election of independent directors to consider widespread implementation of cumulative voting system, giving minority shareholders more rights.
Exit mechanism of independent directors should establish an information disclosure system. Non-normal exit of the independent directors of listed companies compulsory disclosure of information, specifically including the following aspects: the removal or re-appointment of independent directors, the decision should be made by the shareholders' meeting, and be disclosed in the designated disclosure media, explain why. Optimized the structure of the professional background of the independent directors. Listed company as a complex system, its good run effective combination of needs from a wide range of knowledge, which requires a diverse and balanced independent directors, independent director from the business community and non-business community should take into account, in accordance with their professional background to augment the Professional Committee of the Board of Directors includes, to improve the overall efficiency of decision-making and decision-making levels of the independent directors.
3 independent director's right to know. In building systems, regular information communication system of listed companies and independent directors should establish the Independent Directors immobilized, meticulous; enhance communication and information sharing between the independent directors, established between the independent directors, regular joint meeting the system. For new recruits to the independent directors, the company should carry out the necessary training, and provide information in a timely manner; refinement of the independent directors the right to know the specific content, such as the company's financial condition, investment, research and development reports.
In addition, only the independent directors in many listed companies are open to the Board arrived at the scene, a very limited understanding of the situation, more difficult to play its independent functions. Independent directors general characteristics of part-time directors, in order to ensure participation in corporate decision-making and effectiveness, we may learn the Minsheng Banking original system of independent director to work, work, time to improve.
The Minsheng Bank since March 2007, the implementation of independent directors to work system requires independent directors to work 1-2 days a month, and arranged a special office for independent directors. Both to meet the minimum standards of "guidance" for at least a year working for the company the provisions of 15 working days, through the system to work to improve the right to information. The independent directors to work: study belongs to the Committee's work matters; listen to management or administrative departments, reporting; independent directors before major decisions involved in research to help the concrete implementation of major decisions, not only their right to know greatly improved, and really play expert expertise of independent directors.
[1] Xieyong Zhen: evaluation index system of independent directors in corporate governance evaluation design [J]. Nankai Business Review, 2003 (3): 17 ~ 19
[2] Xiang hole: Chinese and foreign independent director system [J]. Theoretical Forum of Business Administration, 2001
[3] Tan Jinsong: independent director "independence" [J] Chinese industrial economy, from 2003.10:64 to 73
[4] Hu Qin Qin: independent outside directors can improve the operating results of listed companies the world economy, 2002
[5] Qing-Quan Tang: independence and remuneration of knowledge and information, who is more important. Contemporary of Economics and Management, 2005 (6): 32 ~ 35
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