An Empirical Research On The Relationship Between Reputationincentives Of Independent Directors And Their Working Opportunities

August 2001, the CSRC issued "Listed companies on the establishment of an independent director system guidance", which shows that China has formally introduced in the corporate governance system of independent directors, corporate governance mechanism in China is an important part of the reform. However, the prevalence of other countries in Europe and America independent director system in China’s listed companies have a "South Orange North trifoliate orange, " "acclimatized "phenomenon. "Shanghai Securities News, " first published in Survey of China showed that the survival of independent directors:33% of the independent directors on the board has never cast a vote for or against the waiver, 35% of the independent directors and executives of listed companies has never made a Independent opinion differences. Therefore, people of independent directors even dubbed the "Vase Director." What cause for this difference? How to improve the status of independent director system in China to make it play a greater role? This is placed in our company managers and theorists an important subject.This reputation for independent directors from the perspective of incentives, the use of mainstream economic analysis, the use of the combination of theoretical and empirical, quantitative and qualitative analysis and other methods, the analysis of the literature on reputation incentives of independent directors Theory based on the combination of the institutional context, the use of model building, empirical research methods such as independent directors of listed companies in China are inspired by the reputation of quantitative and qualitative analysis.The article first reviews the domestic and international reputation of the independent directors of incentives related literature, theoretical research related to the context as follows:principal-agent theory suggests that the presence of agency problems make the monitoring to be necessary, however, assume the role of policy-making board oversight is sometimes controlled by managers, the introduction of independent Board of Directors and management help to reduce the conspiracy, therefore, corporate governance is of great significance. However, the independent directors is also the rational economic man, the independent directors and there are agency problems between shareholders, so the need for independent directors to the reputation of incentives. The reputation of the existing literature confirms the effective role of incentives.The third part of the incentive mechanism of the role of independent directors of social background. As listed companies in China "dominance" special ownership structure of major shareholders for their own interests, by controlling the management and the board, and information superiority by holding the status of occupation of the interests of minority shareholders, is the largest shareholder and minority shareholders The agency problem of being a public company’s principal agent problem. In order to safeguard the interests of minority shareholders and ensure long-term stable development of China’s securities market, China’s securities regulator introduced independent directors on the company’s internal control system to monitor people and checks and balances. However, the function of independent directors to play depends on the independence of independent directors to maintain, if the independent directors lose their independence to and may become the major shareholder and board of supervisors as a vassal. This article is in the context of such a system, trying to encourage the independent directors of the reputation of the actual effects produced by some of the inquiry.The second of three parts in the article on the basis of theoretical analysis, the paper’s reputation from the independent director incentive point of view, were selected under the incentive mechanism in the reputation of some of the behavioral characteristics of independent directors:awareness, conference attendance rates, opinions expressed, offices in the company punishment and other data, and the future of independent directors can get the number of positions for analysis, empirical findings, diligent, high-quality independent directors, independent directors can get more on the labor market, "the reputation of return", which also said the Chinese name the reputation of the independent directors incentives to be effective. The specific conclusions are as follows: First, the paper summarizes the independent director system of foreign background and theory of the birth of real significance, and the development of all countries in the world, the operation of the typical ownership structure of companies under the independent director system was analyzed and found that an effective national system to run independent directors of very different, in different corporate governance structures show different characteristics. This is mainly depends on the country’s market background, legal and cultural factors.Second, the comparison of Chinese and foreign independent directors of different functional orientation system was established, the foreign shareholding is based on decentralized structure, the establishment of an independent director system aims to represent the interests of all shareholders, effectively prevent the internal control, that by the Manager occupation of the phenomenon of residual claims. Shareholders in order to solve the agency problem resort to management. And because of historical issues of domestic equity structure to the company the adverse nature of structure-particularly reflected in the ownership concentration, "dominance" and so on. Under the listed company "with the shares of the same rights" principle, the company has absolute control of large shareholders, have an incentive to use its position in the listed company to make decisions in favor their own interests, and ignore of minority shareholders, even is against the interests of minority shareholders, major shareholders appear "empty" behavior. Faced with this vicious situation, minority shareholders in the company management and major shareholders the right to speak does not contend, therefore, we hope the independent directors in corporate governance can act as the eyes and represent their interests to oversee the company’s management. Therefore, the introduction of independent director system in China is deviation from the initial target. The interests of all shareholders between the shareholders and managers to resolve agency problems, but representatives of the interests of minority shareholders to solve small and large shareholders contradictions between the shareholders.Third, whether in domestic or foreign, independent directors are themselves represented the interests of others to perform their duties, then, when the independent directors and are inconsistent between the interests of agents, independent directors and also exist between the principal agency problem. Under the assumption of rational economic man, independent directors have an incentive to the process of carrying out their duties in pursuit of maximizing their own interests and ignore the interests of the principal. This is not an effective national system of independent directors to play an important reason. According to McGregor on human nature "Y theory", the key to solving this problem is to establish an effective incentive mechanism for independent directors.Fourth:In this paper, the independent directors of the analysis by the material incentives, the results show that material incentives to motivate independent directors did not diligently perform their duties seriously, the reason one hand:the independent directors of listed companies can only participate in the board of directors by such form of performance of their duties, at the meeting, the Board of Directors resolution, the experts put forward their own observations. Therefore, the salary structure of the independent directors is dominated by fixed salaries paid in the form of payment. In such a salary structure, independent directors received remuneration in listed companies to facilitate the performance is not necessarily relevant, therefore, independent directors leave the way to material incentives will lose its effectiveness; the other hand, the domestic the vast majority of independent directors from universities, research institutions and other social successful people, they themselves will have sufficient material basis for the pursuit of material when they are met, the increase in material incentives will be diminishing marginal utility from this point of view, material compensation will be driving forces for the loss of independent directors.Fifth:Since the material incentives of independent directors can not effectively play, then the incentives will point to the focus as opposed to the reputation of incentives. According to Maslow "human hierarchy of needs", when used as an independent director of social success are more motivated to operate, maintain their own human capital as a "reputation." Therefore, we selected conditions in the reputation of incentives, some of the behavioral characteristics of independent directors, have access to appropriate, "the reputation of return." The empirical results show:the visibility of independent directors significantly positive impact on the post of independent directors to get the number of shells, "famous" independent directors than the "unknown" for more independent directors of the "reputation of return"; independent directors absence rate meeting of independent directors negative impact on the number of positions you can get, "diligent performance of their duties," the independent directors than the "good Yi lazy," the independent directors can get more of the "reputation of return"; independent directors consistent negative opinion affect the number of positions available to independent directors, "toe" of independent directors seems more than "compromised" the independent directors are more popular, which seriously affected the reputation of the effectiveness of incentives; The aftermath of the scandal, the company’s independent directors for the next available significantly decreased the post, the reason is because, after the scandal of independent directors serving on the company reputation, and its value as an independent director is also associated decline in human capital.Of course, the reputation of incentive mechanism in China played the role of independent directors have not been fully reflected, further reforms should give minority shareholders the right selection of independent directors, from the selection of independent directors to fully ensure its "independence", and improve the reputation of independent directors incentives to make the independent director system to play effectively.