A Study Of The Characteristics Of Independent Directors And Corporate Performance

The establishment of the independent director system in our country is a compulsory process that leaded by the government, which, to a great extent, determined the characteristics of Independent directors and had an effect on the role of the independent directors in the listed company.Since the "Guiding Opinions" was promulgated in August2001, what happened to our Independent director system? Has the characteristics of Independent directors changed? What kinds of characteristics significantly influence the performance of the company? The system of independent directors attracted the attention of scholars’and related people’s, especially on the case of the "useless of the independent director" and the common phenomenon of "Tunneling" that directed by big shareholders. Depicting the independent director’s quality from their characteristics, this research would like to explore the influence on corporate value which directed by independent directors.In general, the features of independent directors including external features of the individual such like gender, age, education background, the source (from government agencies, schools,accounting or law firm, etc);personal interests, character, quality and other internal disposition characteristics; term of office, part-time (may be directors or independent directors of other listed company) job characteristics; meeting attendance, the type of opinions at the meeting or other behavior characteristics; and also including the proportion of independent directors (the number of independent directors/the number of the directors). Some characteristics can be quantified, some cannot. Some data is available, some is not. In order to explore how much the independent directors influence the company performance, this study chose as much as possible characteristics of independent directors that can be measured totally. It depicted the characteristics of independent directors in quality from the established way of the independent directors, gender, age of independent directors, the proportion of the independent directors, the busy proportion of the independent directors and the pay of the independent directors, and used standard analysis and empirical analysis to analyze the relationship between independent directors and performance of the company.As for the empirical part, this paper used the listed companies in2002-2010to make some panel returns. Panel models include linear model, the square models, and the cross models. In the square models, this paper examined the effect of average salaries, average age on corporate performance. Cross model examined whether the effect of independent directors gender, age, part-time, salary on company management performance is influenced by the proportion of independent director. Research found that1) whether a listed company voluntary to establish independent directors has a significant role on company management performance;2)the gender of the independent directors has no significant effect on the operating performance;3)In considering the cross impact among other characteristics of independent directors, the average age of independent directors positively affect company management performance;4) The independent directors average salaries positively affect the company performance significantly; In considering the cross effects between the other characteristics of independent directors, the proportion of the independent directors and company performance are significantly positive correlated;6) the proportion of busy independent directors and the company operating performance are significantly negative correlated.Cross model also showed that, firstly, the higher the proportion of the independent directors and the more women independent directors, the poorer the company operating performance. Secondly, the higher the proportion of the independent directors and the higher the age of independent directors, the poorer the company operating performance. Thirdly, the higher the proportion of the independent directors and the more the busy independent directors, the poorer the company operating performance.The innovation of the paper mainly lied in depicting the features of the independent directors thoroughly. These characteristics represent not only the number of independent directors, but the quality of independent directors, which measured its function more effectively. Owing to the data source is limited and the size of sample is large, this paper only studied the six variable features of the independent directors. As for the characteristics of independent directors, this paper has the following deficiencies. On the one hand, there was no account of the education background and working background of independent directors. On the other hand, no considering behavior characteristics such like the number of submit proposals and whether the workplace is consistent with the resistance.