Study On The Independent Director Supervision Of Individual Behavior

The independent director system has been regarded as an important means of improving thegovernance structure of listing Corporation. In order to protect the interests of minorityshareholders, the original intention to set up the independent director system in China is expectedthe independent directors can fully exercise the supervisory functions, so the independentdirector system can effectively curb listing Corporation’s insiders and big shareholdersencroaching small shareholders’ interests. It has been developing and exploring more than tenyears Since the independent director system was introduced into the listing Corporation in Chinain2001. However, we still find out that some of the independent directors do not exercise theirsupervision function appropriately in the presence of multiple interests, and neglect of duty insome cases which the listing Corporation themselves encroaching the interests of minorityshareholders. The independent directors’ neglect of duty has become the original causes of theoutbreak of scandals in company administration. So, the core of this paper wants to discuss ishow to solve the problem that independent directors do not exercise its supervisory functionactively in reality, by analyzing the cases that the independent directors do not act effectively.This paper wants to reveal a new perspective of the supervision behavior of individualindependent director, based on the Summarization and comment of literature of studying aboutindependent directors at home and abroad. This paper uses the independent directors reported"dissenting opinion" as the proxy variables of the effective exercising supervision, and apply theresearch results of previous scholars about the effect of supervision of independent directors andrelated fields study results on the study of specific supervision behavior of the independentdirector, use the data that analyze from the mandatory disclosure of listing Corporation ofopinions on board bill reported by independent director, to research the effect of independentdirectors’ supervision. In the process of empirical research, this paper uses the Logistic modeland SPSS statistical analysis software, and choose the cases that the independent directorquestioned on board bill from2006to2012in stock markets of Shanghai and Shenzhen assamples, and bases on which analyzes the relationship between individual characteristics andspecific supervision behavior of independent director. Results show that, the independentdirector’s professional background, number that independent directors doing part-time,salary, location and term of office will affect its supervision behavior. In particular, independent directorwith professional financial or legal background, working in the same area with the employedcompany are more likely to question on board bill openly. If independent directors performanceduty later than the current chairman of the board, they have less possibility to question on boardbill. The more important the salary that independent directors obtain from the listed corporationthey are employed, the less possibility they question on board bill. The above findings suggest,the regulatory departments and institutions can take measures to improve the present situation ofindependent directors of China’s low rate of dissent, fully stimulate the enthusiasm ofindependent directors to exercise the supervisory functions. Those measures include improve therelevant laws and regulations, create a good external environment, improving the independentdirector appointment and withdrawal mechanism, to encourage independent director to knowmore about the information of listing corporation and improve their professional attainment, etc.