The Study On Supervision Of Independent Directors Of Listed Companies In China

In order to improve the governance effect of listed companies,improve the corporate governance system environment in China,and supervise the listed companies to prevent the occurrence of large shareholders tunneling and other violations,the independent director system has been introduced into China.In recent years,China's independent director system has been constantly improved,and the requirements of the proportion of independent directors,independence and qualifications of listed companies are becoming more and more stricted.However,according to the public disclosure data,during 2012-2018,the number of company violations punished by the CSRC was 52,60,86,107,183,224 and 310,showing a rising trend,indicating that the supervision function of independent directors has not been played well.The phenomenon that independent directors are called "vase directors" and "rubber stamps" is becoming more and more popular.How to effectively realize the supervision effect of independent directors has become one of the focuses of corporate governance research.Based on the above background,from the perspective of improving the supervision effect of independent directors of Listed Companies in China,this paper combs the relevant literature at home and abroad.First of all,it is found that there are insufficient individual supervision and incentive problems in the process of supervision in China.The specific performance is the limited incentive effect of independent directors' salary,the lack of effective reputation incentive mechanism,and the defects of appointment and removal mechanism.At the same time,there is the problem of weak ability of independent directors to perform their duties.Secondly,independent directors and supervisors are the main body of internal supervision of listed companies,but in fact,they can not form a joint force of supervision.There is even the phenomenon of mutual prevarication and unclear rights and responsibilities between the two.Finally,as the main force of external supervision of corporate governance,the CSRC has failed to effectively promote the independent directors to play a supervisory role.The media,which plays the role of external supervision of corporate governance,fails to promote the supervision of independent directors,even has a negative impact.The existence of these situations makes it difficult for independent directors to play their supervisory role effectively,which leads to the problems such as tunneling of karge shareholders,insider control,collusion between large shareholders and management to damage the interests of small and medium-sized shareholders.In view of this,considering that independent directors,major shareholders,managers and other participants are limited rational groups,the formation process of their specific behaviors is not achieved overnight,but gradually formed through continuous improvement in the process of continuous optimization of strategies and behaviors.Therefore,this paper starts from the interactive game of various stakeholders in the process of independent director supervision,respectively analyzes the salary incentive,reputation incentive,appointment and removal mechanism of independent director in detail,and discusses how to improve the independent director's performance ability to promote the supervision effect,promote the joint force between independent director and the board of supervisors,and improve the independent director through the external regulatory role of the CSRC and the media Supervision effect.By studying the evolution process of the interaction among stakeholders in the process of independent director supervision,this paper establishes the evolutionary game model and replicates the dynamic equation,finds out the evolution process of the decision-making of the stakeholders in the game process,and seeks the evolutionary path to improve the supervision effect of independent directors,so as to contribute theoretical reference and guidance suggestions for the improvement of the effectiveness of independent director supervision in China.The research results of this paper mainly include the following aspects:(1)This paper holds that the independent director talent pool should be established by the CSRC,and the independent directors under due supervision should be given the reputation reward by publicly commending,giving the title of "due diligence independent director",and recommending the key positions of these independent directors to the listed companies.The independent directors who fail to perform due diligence supervision will be removed from the independent director talent pool and disclosed publicly at the same time,and they will no longer be allowed to hold the post of independent director.These measures can give full play to the reputation incentive of independent directors and promote the supervision effect of independent directors.This paper analyzes the strategy selection process of independent directors and major shareholders under the current weak reputation incentive and the establishment of effective reputation incentive by using evolutionary game method,and demonstrates the important significance of establishing independent director talent pool in China to effectively play the reputation incentive mechanism of independent directors and improve the supervision effect of independent directors.The results show that:through the establishment of independent director talent pool,on the one hand,the reputation of the independent director who is under due supervision will be rewarded;on the other hand,the independent director who fails to perform due diligence supervision will be punished by moving out of the talent pool,making public disclosure and prohibiting re appointment.And these measures can make the reputation incentive mechanism of independent directors play an effective role,and improve the supervision effect of independent directors on violations.(2)On the basis of clarifying the classification of the remuneration of independent directors and dividing the remuneration of independent directors into fixed remuneration and variable remuneration,the focus and breakthrough of establishing the compensation incentive mechanism are focused on improving the variable remuneration of independent directors.If allowed,gradually reduce the proportion of fixed remuneration of independent directors,increase the proportion of variable remuneration and appropriately increase the proportion of variable remuneration in the whole income of independent directors,so as to urge the real exertion of supervision efficiency of independent directors.This paper uses evolutionary game theory to analyze the strategy selection process of independent directors and large shareholders under different salary incentives,and demonstrates the influence of compensation incentive on independent directors' supervision function.It is found that when the remuneration of independent directors is divided into fixed remuneration and variable remuneration,the size of the fixed remuneration will not affect whether the independent directors can perform their supervisory functions due to their due diligence.However,if the remuneration is increased or decreased with the increase or decrease of the income of external investors such as small and medium shareholders,it will be proposed in the board of directors Dissent and the performance of supervision function have a positive impact.(3)We should improve the mechanism of appointment and removal of independent directors to enhance the supervision effect,and establish the appointment and removal mechanism of independent directors jointly selected by CSRC and listed companies.The CSRC should establish a talent pool of independent directors,which is mainly responsible for selecting and appointing independent directors who provide supervision functions,and listed companies appoint independent directors who provide consulting services,human and social capital output and strategic functions according to the development of the company,and ensure that the independent directors appointed by the CSRC share more than half of the voting power of the board of directors.Among the independent directors appointed by the CSRC,the independent directors who fail to perform due diligence supervision shall be cleared,and the independent directors who are subject to due diligence supervision shall be selected.Realize the effective rewards and punishments to the independent directors.This paper uses evolutionary game theory to analyze the strategy selection process of independent directors and major shareholders after the current appointment and removal mechanism and the improvement of appointment and removal mechanism,and demonstrates the importance of improving the appointment and removal mechanism of independent directors to enhance the supervision effect of independent directors in China.It is found that the establishment of the appointment and removal mechanism of independent directors jointly by CSRC and listed companies,the selection of independent directors responsible for supervision functions by the CSRC,the selection of independent directors responsible for other functions by listed companies,and the implementation of effective rewards and punishments on the independent directors selected by the CSRC can improve the appointment and removal mechanism of independent directors and further promote the independent directors to deal with violations Effective supervision.(4)In order to effectively realize the supervision function of independent directors,we should not only start from the effective supervision of individual independent directors,but also strengthen the allocation of independent directors' performance ability,human capital and social capital,attach importance to the cultivation of independent directors' performance ability,and gradually increase the number of capital allocation.These measures can improve the supervision effect of independent directors and restrain the illegal behaviors such as tunneling of large shareholders.From the perspective of evolutionary game,this paper analyzes the strategy selection process of independent directors and large shareholders under the condition of different performance ability,and demonstrates the influence of different performance ability,human resources and social capital allocation on the independent director's supervision function.It is found that if the independent directors can provide high-level human capital and social capital assistance for the corporate governance process and have high consulting service ability,they can prevent the abnormal resignation after voting for illegal behaviors such as tunneling of major shareholders and internal controllers.For the independent directors who are difficult to provide effective advice in terms of consulting services,it is easy to lead to targeted behavior of major shareholders afterwards,and such independent directors have a higher probability of abnormal resignation.That is to say,the independent directors who can provide effective human capital and social capital can effectively supervise the improper behaviors in corporate governance.(5)In order to solve the dilemma of dual supervision mode of Listed Companies in China and further improve the governance level of listed companies,on the one hand,we should establish the accountability mechanism of the board of supervisors,punish the supervision of the board of supervisors and investigate its responsibility.On the other hand,the board of supervisors should supervise the degree of due diligence supervision of independent directors,regularly issue supervision reports on the degree of due diligence of independent directors,and publicly disclose the degree of due diligence of independent directors in performing their duties.This paper uses evolutionary game method to analyze the supervision mechanism of independent directors and board of supervisors,and clarifies the incentive mechanism to enhance their due diligence.The study found that on the one hand,China should establish the accountability mechanism of the board of supervisors,on the other hand,the board of supervisors should become the main body to supervise the degree of due diligence of independent directors in real time,so as to realize the supervision of independent directors.These measures can improve the supervision effect of the board of supervisors and independent directors at the same time,make them form a joint force,and further improve the level of internal governance.(6)Relevant measures should be taken to improve the information acquisition dilemma of independent directors,so that the independent directors are forced to disclose the source of information on which the independent opinions are based when issuing their independent opinions,and the independent directors are required to show strong evidence of the sources of information.The rewards and punishments for the independent directors' due diligence and the concealment of corporate governance information from major shareholders and insiders should be implemented more vigorously and fairly Shareholders and insiders conceal information.These measures can ensure that independent directors can effectively obtain the true information of corporate governance.This paper uses evolutionary game method to analyze the strategy selection process of independent directors and major shareholders after the difficulty of obtaining information is high and the degree of independent directors' information acquisition is improved by relevant measures,and demonstrates the importance of ensuring the information acquisition of independent directors by relevant measures in China to improve the supervision effect of independent directors.It is found that the independent directors should be forced to disclose the information sources on which the independent opinions are based when issuing their independent opinions,and the independent directors should be forced to provide strong evidence of the sources of information,implement more fair reward and punishment principles for independent directors' due diligence and concealment of corporate governance information from major shareholders and insiders,and disclose information hiding behaviors of major shareholders and insiders.These measures ensure that the independent directors can effectively obtain the real information of corporate governance,effectively improve the "information asymmetry" problem of independent directors' supervision,and further promote the effective supervision of illegal behaviors by independent directors.(7)To play the role of external supervision of the media to supervise the independent directors,we should start from the following aspects:first,we should pay attention to the influence of media supervision on the behavior of independent directors,and actively use the media to supervise the illegal behaviors of Listed Companies in the process of corporate governance,so as to promote the due diligence supervision of independent directors and form a joint force with the internal supervision of independent directors.Second,while using the media supervision,we should strengthen the establishment of scientific incentive mechanism and appointment and removal mechanism of independent directors,and cooperate with each other to improve the weakening of supervision effect of independent directors,so as to ensure the effective play of the supervision function of independent directors.Third,the media should avoid collusion with interest groups for self-interest and other reasons,so as to reduce the negative effect of biased reporting.In this paper,the evolutionary game method is used to deduce the influence of different media behaviors on the behavior strategy selection of independent directors and large shareholders in the process of independent directors' supervision.It is found that,on the one hand,the media's strong disclosure and external supervision of corporate governance violations are conducive to the exertion of the supervision effect of independent directors,and have the role of punishing the evil and promoting the good for the behavior of independent directors.On the other hand,the collusion between the media and the interest groups of listed companies or the reporting bias caused by the local government's manipulation of the media is not conducive to the exertion of the supervision effect of independent directors.Therefore,in order to realize the effective supervision of independent directors,we must attach importance to the role of the media as an external supervision subject,so as to improve the supervision effect of independent directors and jointly supervise the illegal behaviors of listed companies.The innovations of this paper are as follows:First,under the condition that the existing research focuses on the analysis of the independent director's remuneration as a single indicator affecting the independent director's behavior,this paper divides the independent director's remuneration into fixed compensation and variable compensation.Through the analysis,it is proved that the fixed salary is not conducive to the effective supervision effect of independent directors in China,while the variable salary is conducive to improving the supervision effect,which provides a theoretical reference for the establishment of an effective compensation incentive mechanism for independent directors in China.Second,on the basis of sorting out and analyzing the existing literature on the mechanism of appointment and removal of independent directors,this paper puts forward the view that independent directors should be selected and appointed jointly by CSRC and listed companies.The CSRC is responsible for the selection and appointment of independent directors who provide supervision functions,and listed companies are responsible for selecting independent directors who provide advisory services and strategic support functions.Through the mathematical model,it is proved that the selection mechanism is of great significance for the realization of the supervision effect of independent directors,which provides a new idea for improving the appointment and removal mechanism of independent directors in China.Third,through theoretical analysis and literature review,this paper puts forward the proposition that the board of supervisors should supervise the degree of due diligence of independent directors in order to promote the supervision of independent directors and the board of supervisors.At the same time,it proves that this measure is of great significance to realize the supervision effect of independent directors and to break the dilemma of dual supervision of Listed Companies in China.It provides a theoretical reference for improving the supervision effect of independent directors and improving the internal governance of listed companies.