Study On The Impact Of Accounting Independent Director And Firm Performance

Chinese Securities Regulatory Commission (CSRC) announced"Dieretion Opinion on Estbalish Independent Dieretor Systemin Listed Coprorations"in August 2001,which explicitly stipulates that there should be at least one accouting independent director in each listed firm. In order to study whether accounting independent director has a significant positive effect on firm performance, this paper studied the realtionship between accouting independent director and firm performance based on the analysis of acouting independent director system.Beased on the Company Governance Theory, Principal-agent Theory and Encouragement and Restriction Theory ,this paper studied 263 listed companies which issued A stocks in Shanghai and Shenzhen Stock Exchange. Firstly, this paper analyses the personal information of accounting independent director,including age distribution, educational background and level of salaries. The results indicate that most accounting independent directors are in young and middle age and they are in possession of bachelor,master and doctor degree. Moreover, over half of them work in the university with a higher income . Secondly, this paper analyses the performance-duty behavior of accounting independent director which includes the information of professional committees in listed companies, the attendance information of accounting independent director and the expression of their opinions. The results indicate that most listed companies set up four professional committees, but also find that there is only one accounting independent director in audity committee. Half of accounting independent directors are able to attend board meeting and most of them express consent opinions. Based on the above analysis, it is found that accounting independent director fulfilled their responsibilities requested by the"Direction Opinion". However, there are some problems, for instance,the number of accounting independent director is not enough, some retirees act as accounting independent director, few of accunting independent attend the board meeting by means of communication and accounting independent director rarely epress disagreements.After having a comprehensive command of the status quo of accounting independent directors, this paper conducted an empirical research on the relationship of accounting independent directors and firm performances. Firstly, through establishing a fix-effect model with panel data, it is found that the proportion of accounting independent directors has an obviously positive correlation with firm performances. Secondly, the accounting independent directors had been classified into independent accounting directors with practical ability and the expert for deeper research, and each was used to build a fix-effect model with firm performances. It is found that no significant correlation was observed between accounting independent directors with practical ability and firm performances, however, the expert are obviously correlated with firm performances. This conclusion provides a strong support for the existence of positive correlation between accounting independent directors and firm performances.Based on the above research, this paper put forward some advices with the account into some problems existing in the execution of accounting independent director systems, for instance, the accounting independent directors are small in number, most of them are retirees, and they rarely participate the board of directors in person and express their negative opinions. These advices are: increasing the proportion of accounting independent directors in a firm, making more strict requirements on listed companies'hiring accounting independent directors, establishing the responsibility mechanism of independent directors and Strengthening the Supervision on the performance of accounting independent directors, combining reputation and payment incentives to make accounting independent directors offer better service to the firm. Last but not the least, better external environment should be developed to perfect accounting independent director systems in China.