Banking Background Of Independent Directors’ Role In Company:Supervision Or The Supply Of Credit Resources

The independent director system emerge from the useless control department.In the framework of the double principal-agent theory, there are two types of the principal-agent problem:The first one is the separation of ownership and management, this kind of principal-agent issue may result serious troubles between owners and managers; The other is the separation of ownership and cash-flow right,such kind of principal-agent issue may result serious problems between major owners and minority owners. For the first kind of principal-agent issue, the owner’s goal is to maximize shareholder returns, while the operator’s goal is to get more money and more leisure time. Two different targets led to the behavior of operators deviate from the target of owner, managers are tend to just do their job in a stationary way and not to aimed at getting more benefit, but only in not doing things wrong. Sometimes, Agency issue even reflect as moral hazard and converse choice, in order to settle such kind of agency issue, the company is eager to build an effective monitoring department to supervise operators’ business activities to ensure that the overall interests of the company will not be harmed. For the second special agency issue, with the increase in the company hierarchy, ultimate controller and ultimate ownership will depart from each other, such kind of separation is a direct reason of ultimate control rights depart from cash-flow rights, which means a controlling owner in the company who owns the more little cash-flow rights, the greater the motive against the benefit of minority owners, because the higher the controller is, the lower the costs will be paid. If major owners have the ultimate control rights, they will be able to manipulate management decision to gained benefits which is not belong to their own. In the major shareholders against the interests of minority shareholders serious corporate governance environment, it is necessary to hire someone to represent the interests of minority shareholders to supervise major shareholders to ensure that the legitimate interests of minority shareholders against the expropriation. As the supervisor of the Supervisory Board was difficult to play the role of corporate governance under the supervision of the environment, build independent director system becomes inevitable.With the progress of the corporate governance theory, scholars have found that independent directors can not only play as a supervisory role, but also act as a supply of outside resource. Resource dependence theory holds that companies hire independent directors to the Board of Directors is aim to obtain external resources which companies can’t get from the inside. Independent director requires professional knowledge of corporate management Science and has more than five years of economic or legal aspects of the work experience. Therefore, the enterprise independent directors should not only play as a supervisor, but also supply outside resources.Independent directors with banking background is a small group, because of its "bank" feature,such kind of director is more likely to bring enterprise scarce credit resources. Based on formerly research and document, we select the background of the first banks to hire independent directors of the company as a sample. Research related to its oversight role and the role of credit resources provided. According to the research results, we can get the following conclusions:1. Regression results show that our independent directors with banking background supervise managers and major shareholders are formal supervision, not a kind of essential supervision;2. Independent directors with banking background apparently heighten the company’s credit flow and credit stocks, but Independent directors with banking background can’t reduce the company’s borrowing costs;3.When government reduce the amount of currency, independent directors with banking background apparently heighten the company’s credit stock, but Independent directors with banking background can’t increase reduce credit flow and reduce borrowing costs.