Study On Accommodating Function Of Independent Directors In Chinese Listed Corporations

Some US-led western countries have introduced the independent director system, to ensureobjectivity, impartiality, transparency and independence in the operation of the board of directorsfrom the late1960s. China Securities Regulatory Commission issued “the guidance system on theestablishment of independent directors in listed corporations” in August2001. Since then,independent director system has become an important part of the management of listedcorporations. Corporates’ strategy, mission, organization and other factors are dynamic in differentgrowth stages of listed corporations. As the principal organization of corporate governance andmechanisms, independent directors’ function should take dynamic accommodation withadjustment of objectives, tasks, and the path of corporate governance.Based on principal-agent theory and the corporate life cycle theory, the article introduces atheoretical analysis framework about independent director’s function of adjustment bysummarizing the company management, independent directors, life cycle of enterprises and otherdocuments and practice research. This article focuses on the establishment of the theory offunctional adaptation model of independent directors based on corporate life cycle. By analysis ofthe model and characteristics of corporate life cycle, we know that supervision, strategy, check arethree key functions of independent directors and they are dynamic. From an empirical point ofview, the article takes case analysis. By analyzing Haitong Food Group Co., Ltd, this articledemonstrates the theory of functional adaptation model of independent directors based oncorporate life cycle once again in practical effect.The first chapter is an introduction. it summarizes background, significance of this study andliterature reviews of relevant theories. The literature review is mainly about corporate governance,independent directors, corporation life cycle, etc. Chapter Ⅱ discusses the content of corporategovernance and independent directors, then analyzes the function of independent directors; ChapterⅢ elaborates on the theory of functional adaptation model of independent directors based oncorporate life cycle. It takes a brief analysis of the dynamic adjustment about the function of theindependent directors. Chapter Ⅳ analyzes Haitong Food Group Co., Ltd, from a practical point ofview, to prove the independent directors’ function changes at different stages of the developmentof enterprises. Chapter V summarizes the achievements, shortcomings and prospects of this theoryand case studies.