Study On The Independent Director Behavior And Penalty System

From a global perspective independent director system is a successful institutional arrangement,which constitutes part of the modern corporate governance,effectively suppressing the problem of agency problems costed by the separation of ownership.Since1992 the London Stock Exchange(LSE)Regulations promulgated British Board of listed companies had to keep at least three independent directors seats in the board,at least 18 countries have introduced independent director system in coming next 7 years.Especially in the birthplace of the United States,the number has already reached more than 70%.Back to China,CSRC subsequently promulgated "Opinions on the establishment of an independent director of listed companies guidance" in 2001,which initially regulated the independent director qualifications and responsibility.However in the meantime,Zhengbaiwen event occurred famous as Chinese first case of independent directors,and Beidahuang group follows.So many scandals had brought Questioning and criticism to independent directors,such as "Vase Director","independent director no independence".Especially recently with the introduction of the Central Organization Department Document No.18,officials departure tide of independent directors appears,which leads independent director system once again pushed to the cliff..So how to motivate independent directors to perform their duties diligently,to construct a reasonable and effective punishment system becoming very urgent.Based on the existing literature,this article examined independent directors behaviors and the effectiveness of penalty system rooted in Chinese environment,which is different from the traditional research model.We take independent directors behaviors as the breakthrough point,mainly solving the following two problems: one is the investigation of independent directors behaviors and objective environment,which will provide the foundation of penalty system;Another problem is to study the effectiveness of existing independent directors penalty system,and how to build it.Specifically,the research design consists of the following four aspects:First in order to better describe the effectiveness of independent directors performance,we adopt a questionnaire survey to investigate the independent directors behaviors and risk sources.The result found that compared with executive directors,independent directors are a vulnerable group.They are supplied with poor information and respect,which meansindependent directors has uncontrolled systemic risk couldn’t be dispersed.And the absence of negative vote dose not mean slack performance,which represents the reflection of the Democratic consultation culture.Companies tend to seek independent directors opinions before the official meeting.Second,as the first level of independent directors penalty system,we discussed the necessity and construction of independent directors civil liability.And then analyze the implementation experience of civil liability and protection mechanism from United States,Britain,Germany,Japan and China,which clarify the logic and content of civil liability and protection.The discussion concludes that proceedings should be combined with protection mechanisms,which means when there is a high probability of joint litigation,a wide range of coverage protection mechanism should be build.Third we target administrative punishment mechanism as our research content which is the core part of penalty system.During the design we select 2003 to 2013 administrative penalty events as sample,testing the effectiveness and rationality of administrative punishment mechanism.The results are as follows:(1)False disclosure is the primary suit reason,and the punish level will be aggravated by falling detecting the illegal operation(Guarantees,Related party transactions,etc.);(2)There is clear distinction between effective and independent directors in penalty,which leads to relatively fair punishment results;(3)Committees belong to board provide independent directors a good platform to perform their duties,which gave them more self-protection;(4)There is a deficiency in daily practice of law enforcement by Shanghai and Shen Zhen Stock Exchange.lax enforcement has become an important area for improvement.Finally,the market mechanism which is the most difficult to build,can not be ignored in the penalty system.We first use the Cox risk survival time model examining survival factors and time,find market punishment mechanism is existing and operating.Then we test the risk aversion and reputation effects,found that 87.5% of the stain independent directors can not receive a new offer as a independent director in three years and the remainder stain independent directors receive offer with better financial characteristics.The result demonstrated that individual self-correcting mechanism exists,and the most stains can not be newly appointed as independent directors means reputation mechanism has played its role.What’s more,we also target involved enterprise as our sample,found there is a tendencyto hire less experienced independent directors after punishment,which also could explain the phenomenon of same performance and salary...