Empirical Study On The Impact Of Independent Directors On The Enterprise Value

Independent director system originates in the United States of America, that is theproduct of a system of corporate governance structure, and it achieves good results inimproving corporate governance. The investigation of academic and theoretical circlesin our country that whether the introduction of the independent director system is ofpractical value in the Chinese corporate governance structure or not never stop.American theoretical circles doubted the validity of the independent directors due toEnron scandal and World Com events. The appearance of large shareholders hollowingbehavior led to the doubt of the function of the independent directors. But it isundeniable that independent director system has played a role in enhancing the level ofcorporate governance in China. Independent director system has been implemented formore than ten years in China, previous study of the correlation between independentdirectors and company performance primarily focus on the perspective of ratio or thebackground of the independent directors. In view of special cultural backgroundattaching importance to relations in China, it is necessary that we study the correlationbetween independent directors and company performance from the perspective of socialcapital of the independent directors. Therefore, the paper basing on social capital theoryand resource dependency theory, using financial data of our country’s listed companies,applying statistical methods, study the relationship between the social capital ofindependent directors and enterprise value. It is of great significance to explore theregular relation between social capital of the independent directors and enterprise value,enrich research respective of independent director system, select the independentdirectors for enterprise.The paper puts forward the concept, source, influencing factors and measuringdimension of social capital of the independent directors by means of the scholars’ studyon social capital, and divides social capital of the independent directors into four parts:vertical network of relationships; horizontal network of relationships; cognitivedimension; reputation, and uses resources dependence theory as theory basis, clear theimpact of social capital of the independent directors on enterprise value. Then puttingforward hypothesis on the basis of theoretical analysis, the paper obtains empiricalresults by means of regression analysis, and verifies the assumption of cognitivedimension, reputation and enterprise value. Next, the paper analyzes the empiricalresults from the perspective of theory, combining with the empirical results, and putsforward advice from listed companies and policy-making department, making the paperpractical and appliable.