An Empirical Analysis Of Functions Of Independent Directors And Corporate Performance

The quality of listed companies has become a concern to the community. As the cornerstone of the capital market, the quality of listed companies and capital market operations is directly related to the quality and efficiency of the allocation of resources more effective. For standardized and orderly operation of listed companies, the building of the system is particularly important. As an important part for listed companies to improve management structure, and to protect the interests of medium and small investors, independent director is increasing public concern.Establishing an independent director system is an important measure to improve the corporate government of listed companies. Most listed companies in China come from the restructuring of state-owned enterprises. The majority of the existing mechanism is not completely, which leads to the company's government structure's many shortcomings. In the global economy and capital markets today, in the situation of China's WTO accession, fairness and transparentment, respection for the common international norms and the maximization of shareholder value and protection of the interests of small shareholders has become the common requirements of capital market within the scope of world.Facing State-owned enterprises inefficient situation, the SASAC has the equity division reform in some large and medium-sized state-owned enterprises in 2005, in order to achieve a relatively scattered shareholding structure of state-owned enterprises and improve the performance of state-owned enterprises. Having the equity division reform of state-owned enterprises as part of the listing samples (as the end of 2005), this paper use empirical analysis method to study the relationship between independent directors and corporate performance. Different from the previous study, this paper turns our gaze to independent directors themselves. So in the selection of indicators, more measurement focus on independent directors'own skills. The study of independent directors is of practical significance of establishing a reasonable system for state-owned enterprises, improving the corporate governance structure, improving the performance of listed enterprises.The full text is divided into five parts:The first part is the introduction of the text, explaining the main thesis research background, the purpose of the study, and the structure and framework of this paper , which is positively practical significant to perfect the system of independent directors for China.The second part is the literature review. Which mainly reviewed the independent directors structure of the domestic status and abroad from the theoretical and empirical aspect, having concluded the reasons of the disparity of some studies. At a crucial stage of China's reform, whether established independent directors can really sense the management structure of state-owned enterprises to improve business performance. Now the study of the author gives their answer by the empirical data analysis and test.The third part introduced the definition and principal theory of the corporate governance and an independent director; Combining the agent theory explained theoretical reason and the system reason of the independent director system; Reviewed and summaried the achievements of China's reform and the method of the reform; From the theory of the modern enterprise studied the status of independent directors; Give the relevant assumptions according to the theoretical basis.The next part is the empirical research of an independent director system for listed companies, which is the focus of this paper. This part gived the empirical analysis of performance and indicators relevant to the company structure, by the main variables descriptive statistics and the whole of the linear regression equation of independent directors on the governance of listed companies.The empirical results show that improving our system of independent directors of listed companies plays a positive role in improving the performance of the company. Although not all the variables indicators have shown a significant correlation, the whole model is good to explain the extent of samples. The present system of independent directors has gradually reformed its management functions, but the deficiency is yet needed to be further improved.The last part is a summary of the full text, giving the further analysis of the empirical results, Through reform of the equity division and the previous year's results compared and analyzed, and raised some proposals about the structure of management of independent directors of the listed companies .In addition, the authors conducted a number of deficiencies of this paper, hoping that the next researchers could use more accurate indicators and the appropriate model of straddling study for the independent directors management to get more detailed, more precise independent director system improvement program.