The Theoretical And Empirical Research Into The Resignation Behavior Of Independent Directors Of Chinese Listed Companies

This paper adopts the framework of exit and voice, pseudo-exit and pseudo-voice to analyze the behavior of independent directors of China from the view of maximizing their personal utilities under different conditions based on the corporate governance environment of China. The research shows due to existence of inside controllers, the preference to the network earnings and twisted risk cost for independent directors, when facing the default of controllers, they will not vote against them, and instead they will give up voting or resign to avoid the risks. However, the personal exit cost for independent directors of China is high so that the tolerance of risk is increased to higher level and they will choose to shirk or follow the inside directors to perform in the board. Only when the default is too serious, they will choose to resign from the board.The empirical study into the sample of companies whose independent directors resigned initiatively from 2006 to 2008 shows the independent directors of China are sensitive to salary and real cost. No static indicators but only abrupt event variables will affect their possibility of resignation. Besides, we found the occupation backgrounds of independent directors will impact the decision of resignation of theirs. The results prove the conclusions that independent directors of China is highly risk tolerate and support the existence of network earnings and lack of reputation and spiritual earnings for independent directors of China which are discussed in our theoretical research.