Market Reaction Research About The Abnormal Resignation Behavior Of Independent Directors Of The Listed Corporation

The phenomenon that only one shareholder is dominant in listed company is common in our country. The question that concentrate on stock rights lead strong stockholder often invade benefit of small shareholders. In order to protect the interests of small and medium-sized investors, the independent director system was introduced. In reality, however, the independence of the independent director is controversial. Because investors are difficult to observe the process of internal decision, they can only through the act of the independent director to judge the company’s status. Existing research mainly research from the market reaction of independent director’s resignation and personal characteristics influence on the market reaction, lacking of further divided resign reason and the discussed from the perspective of the independent director function influencing factors. This is the idea of this article.First, this article define the independent directors to resign resignation abnormal behavior, and then analysis the market reaction because of their behavior based on the signal transmission theory. Resign abnormal behavior is a kind of negative signals, caused investors to negative reactions. Finally, according to principal-agent theory, associated research the influence of occupying funds, guarantee and connected transaction on the market reaction based on the analysis of the investor reaction, after the theory analysis, we chose the listed companies that had independent directors resigning abnormally between 2010 a nd 2014 from Wind financial database as the sample, used event study to do the market reaction research and established multiple regression model by SPSS 22.0 to do empirical test of the factors affecting market reaction.We conclude from theory analysis and data validation that independent directors’ abnormal resignation is a negative signal to outside investors. The average abnormal return and the average cumulative abnormal returns of the company both are negative value and will last for a long time afte r the events. Investors’ personal reason is the most sensitive one resulting into independent directors’ resignation. In addition, capital occupation, interrelated guarantee and connected transaction have positive correlation on the average cumulative abno rmal returns of different events, which indicates that these three agent behaviors of big shareholders will intensify the market reaction. What is more, the paper made a robustness test of the events research and the results of multiple regression based on market adjustment model. The test’s results are in agreement with market model, which proves that the conclusion is authentic. This conclusion has positive reference to improve corporate governance and can provide evidence to encourage supervision department to improve independent director system and carry out efficient supervision.