The Inspiration Of Independent Director System In The U.S. To Listed Companies Of China

Independent director system which originated from the United States is a kind of effective corporate governance mode in single board structure. Under a high degree of separation of proprietary and controlling rights, the issue of “insider control” will harm the interests of shareholders. The function of supervision and restraint form independent directors can effectively solve this problem. Therefore,independent director system prevails and develops rapidly in the US. The system was carried out in the early 21 st century in China to face a series of problems in listed companies including high concentration of ownership, the uselessness of supervisory board, and the irrationality of firm administrative system, etc. Obviously,independent director system cannot run smoothly and may bring some new questions under different economic and political backgrounds, different corporate governance mode and different development level of national capital market. With this idea in mind, firstly, this paper analyses the current situation of independent director system through some cases. Secondly, the paper study on the reason of phenomenon of current independent director system. Thirdly, this thesis use positive analysis on A share in Shanghai Stock Exchange and draws the conclusion, after which interpret the result on the basis of China’s actual conditions. Fourthly, the paper contrast the behavior of independent director between the United States and China and draw a conclusion that the difference of institution reflect the difference of institution’s operation condition and capital market of two countries. Finally, give reformative measures of independent director system according to China’s actual conditions.This paper selects a few typical cases of China’s listed companies in recent years, from which we find that independent directors do not function in accordance with the regulations if a serious violation of the law appears in the listed companies.We also find that independent directors always “keep silence” in China’s listed companies. This paper analyses the reason of problems that we have found above.Then we find the reasons may consist of high concentration of ownership, the irrationality on selection system and salary system of independent directors and the overlap of function between independent directors and supervisor in China. Next,the paper makes a empirical research from 2012 to 2014 with the selection of the680 companies on the A share in Shanghai Stock Exchange. We try to analyses the relationship between independent directors and companies’ profitability. The conclusion appears positive correlation between the number of attending meeting times of independent directors and company’s profitability, while it appears negative correlation between the payment of independent directors and profitability. Also, we find there is no correlation between the proportion of independent directors and company’s profitability. According to actual situation in China, we make reasonable explanation and description towards above empirical research. After the case and empirical analysis, the paper compares the independent director system between China and USA from institution’s operation condition and the development of it.Form which we find that the difference of independent directors do not only appear in system, but also appears inside and outside the listed companies. The internal structure of companies and the capital market outside companies are closely linked with independent director system. The basic reason of the difference is the principal factor of the system’s creation and existence. The type of Independent director system is capital market-based mode in the U.S. while is government-based mode in China. Owning to the multifarious differences behind independent director system,strengthening and improving independent director system should be on the basis of aChinese characteristic. When giving specific advices, this paper claim that CSRC(China Securities Regulatory Commission) should establish association of independent directors and administrate them uniformly. We also interpret the function and capital operation of independent director system and we make further efforts to put forward institution of “bi-directional selection” and “reward and punishment” for independent directors. Finally, we elaborates the importance of independent director association on the background of registration system of IPO.(initial public offerings)...