Research On The Influence Of The Background Of Independent Directors On The Private Benefits Of Large Shareholders

In recent years the focus of internal governance of listed companies is the conflict between the shareholders. That is to say the major shareholders to obtain private benefits that damage interests of minority shareholders. Due to the various behaviors of listed companies are run by power, decision-making and supervision institutions, When the internal governance mechanism of supervisors is limited by a greater power, the listed company’s image to a certain extent will be affected by negative. But company insiders such as executive directors, supervisors or other senior executives did not play a role to supervise the behaviors of the large shareholders. Independent directors are not driven by the interests of the listed company and stakeholders, and their income is not related to the interests of the shareholders and managers of the listed company as outsiders. So they will be able to express their opinions independently of the management decision-making and management behavior of listed companies, to supervise the private benefits behavior of large shareholders, to protect the interests of minority shareholders and protect the public resources of listed companies. But the literature about independent directors and major shareholders private benefits just investigated the duties of the independent director group and ignored the different perspectives and advantages of the different background of independent directors in monitoring large shareholders. But the influence of different professional background on human’s thinking process is relatively large. Therefore, it is an important way of controlling shareholders of private benefits for listed Corporation is to employ independent directors with different background characteristics and adjust the structure of independent directors.In accordance with professional classification, independent directors are divided into financial, technical and legal independent directors, to explore their relationship with the private benefits of large shareholders. Firstly, based on the previous literature review, this paper defines the private benefits of large shareholders, and determines the object of private benefits, and gives the classification criteria of independent directors. Secondly the main theories are analyzed, the hypothesis proposed in this paper, and 928 data in the 2008- 2014 listed companies as samples, empirical models of the interaction between Financial Independent Directors and major shareholders private benefits, technology independent directors and major shareholders private benefits, legal independent director and major shareholders private benefits, interaction between technology independent and Financial Independent and interaction between law independent and Financial Independent Directors in controlling major shareholders private benefits were respectively established. And we finally come to the conclusion: Higher proportion of independent directors of Finance and technology, the more can inhibit the private benefits of large shareholders. Technology independent directors and law independent directors can respectively produce synergistic effect with Financial Independent Directors in controlling the private benefits of large shareholders. Therefore, the listed Corporation shall increase the hiring of Financial Independent Directors and independent directors, and shall properly employ law independent directors.The conclusion of this paper can provide reference for the improvement of the independent director system in our country. As a kind of independent director, the financial independent directors are required to be established by the listing Corporation. They play an important role in the supervision of financial information. Technology independent directors can use technology to participate in various types of technology research and development decisions, while monitoring the control of major shareholders involved in the operation of technical activities. In the background of establishing at least one Financial Independent Directors in every listed company, adding technology independent director and the law independent director can produce complementary role in inhibition of private benefits of large shareholders, and thus we can affirm the legal independent directors play an important role in risk management and have an important position in corporate governance.