Research On The Path And Mechanism By Which Independent Directors’ Political Connection Militates

Independent director system originated in the 1930 s, in 1940 the United States enacted the "Investment Company Act", which has been a sign of its engenderer. Many companies in Europe and America and other countries established an independent director system, which is designed to cooperate with the Board in order to strengthen the supervision of the managers, headed by CEO, to solve the increasingly serious problems of insider control. Because of the existence of an imperfect market economy and manager system and other special basic national conditions, the introduction and implementation of the system is not at one stroke. And before that, many domestic Chinese scholars launched a discussion about whether Chinese companies are suitable for the independent director system. At the same time, some domestic enterprises took the lead and carried out a bold attempt of the institution. The community of theory and practice advanced side by side, promoting the development of independent director system interiorly step by step. Until 2001, China Securities Regulatory Commission issued " Guidance on the establishment of independent director institution in listed companies”, which meanes China has already began a new stage of enforcing independent director system. With the development and maturation of independent director system in practice, theoretical research on independent directors is also deepening.While domestic research literature of independent directors has been too much, the literature which has conducted an in-depth study on the mechanism and path by which independent director influence enterprise from the perspective of independent directors’ political ties has bee few and far. On the other hand, domestic research on executives’ political connections of listed companies is very extensive, particularly with regard to the influence on listed companies credit, government subsidies and tax burden by executives’ political affiliation, this field of research has achieved fruitful results, which inspires us studies on these types of paths and mechanisms by which independent directors’ s political connections affect the company’s are necessary and feasible.This paper selects all listed companies except financial and insurance industry of 2011 and 2012,which are Shanghai A shares and Shenzhen motherboard A-shares to do research. The empirical results show that:(1)The higher level of the independent directors’ political contact in Listed Companies is, their access to bank loans and government subsidies will be more, and tax burden heavier;(2)Compared with the state-owned enterprises, the correlation between private enterprises independent directors’ political connection’s degree and bank loans, government subsidies and tax burden seems significantly stronger;(3)The marketization process does not affect the correlation between the degree of independent directors’ political connections and bank loans, government subsidies or tax burden in the listed companies;(4)Compared to the companies in the industry of lower level of competition, listed companies in an industry with higher levels of competition, the correlation between the independent directors’ political connection’s degree and bank loans seems significantly stronger; but conversely, the correlation between the independent directors’ political connection’s degree and government subsidies or tax burden weeker.From the perspective of the empirical findings, this paper confirmed the reasonableness of No. 18 Document issued by the Central Organization Department, noting that in order to reduce rent-setting and seeking behaviors happening between the government and enterprises, we not only need to be involved in the construction of clean and honest party spirit party discipline, but also need to optimize the enterprises’ external environment, including strengthening the construction of regional legal system, reduce government intervention in the market, increase the intensity of the punishment of illegal acts and build a fair and just competition environmen in the market, etc.