Proximitvst And Theformance Of The Board,tru Per

It is almost an understatement to conclude that the literature on boards and corporate governance has abundantly addressed the boards’ability to control top managers and to protect the interests of shareholders. Many articles apply agency-theoretical arguments addressing these topics. Also in business practice, the focus has been on the conflict of interests between managers and shareholders. In line with agency theory, not very surprisingly, calls for independent boards abound. The business world includes many examples of boards that have been called upon to appoint unaffiliated members, from various functional backgrounds, having different personalities, and without shared interests with (the management of) the firm.The underlying assumption in agency theory is that close ties between non-executives and managers impair the possibility of the board to ask critical questions or make tough decisions. In line with these calls, one would have expected that independent boards contribute unambiguously to corporate performance and value creation, either by means of the improved efficiency of corporate decision-making, or at least in terms of the investor appreciation of the value of the firm in the equity market. However, empirical analyses do not find a significant association between corporate performance and a variety of indicators of board independence, such as CEO non-duality and outsider dominated boards. So far, conclusive evidence that independence contributes to the performance of the board or the firm does not exist.Why empirical results are inconsistent with the expectations of the agency theory? How does the close relationship between the board and the CEO may influence the board’s behavior control and advise tasks? Gerwin (2009) make a empirical study examined the impact of a close relationship between the board and CEO, found that proximity will enhance disclosure trust and reliance trust between the board and CEO, also, it will make a positive or negative effect on the board’s behavior control and advise tasks. Gerwin’s result provide a new view to illustrate the board-CEO relationship and deny the independence assumption of agent theory.In China, the board-CEO relations research focuses on the effect of the trait factors, the social capital of the board and CEO’s personality on the performance of the board. So far, there is little literature specializing in the proximity, different trust style and their effect on the board’s tasks. This paper based on the research of Gerwin (2009), empirically examined the effect that proximity and different trust style have on the board’s tasks. Part of China’s listed companies are used as data sample to discuss the relationship between constructs.The empirical results show that the proximity between the board and CEO is positively related to the board’s task performance, which is in line with the result of Gerwin’s research. However, our study shows that reliance trust is also positively related to the board’s behavior control and advising. This result may caused by the different cultural background and values between China and Norway.Therefore, future research can be focused on relationship between the board and the CEO in China context for more in-depth research and development.