Research On The Influence Factors And Performance Of Off-site Independent Directors In China's Listed Companies

As an important part of corporate governance,the independent director system in China is to supervise and balance the controlling shareholders and internal controllers as well as improve the corporate governance structure.Although many problems are revealed in practice,the mechanism is still in continuous improvement.The independent directors' educational backgrounds,professional level,skills,social relations etc.are enhancing,and the supervisory and the consultative functions also come into play.In the theoretical field,the research on the independent directors is more detailed with more attention paid to the backgrounds and characteristics.With the rapid development of geographic economics,studies concerning the working place of independent directors gradually emerge in the research field.Furthermore,an increasing number of off-site independent directors in the listed companies also provides theoretical and practical basis for the study of off-site independent directors.This paper analyzes the phenomenon of off-site independent directors from two aspects: the influencing factors and the performances of independent directors in listed companies,using the method of literature research.There are a series of principal agent relationships in the company.The target of each stakeholder is not exactly the same,which will produce agency conflicts.The one which owns more resources and rights has the incentive to carry out self-interest behavior.However,the supervisory role of independent directors may hinder this self-interest behavior,which makes weakening the overall supervisory function of independent directors become a demand of management or shareholders.The geographical distance and information cost increase the difficulty of supervising,affecting the effectiveness of supervision.Therefore,executives and shareholders are more likely to choose off-site independent directors.On one hand,the geographical distance and the information cost may reduce the supervisory effectiveness as well as the business performances of companies.On the other hand,the off-site independent directors are not confined to the acquaintance network of companies,which can enhance the company's business performance due to more independent supervision.This paper examines how the agent conflicts affect the existence of off-site independent directors and how off-site independent directors influence business performance by empirical research.The results show that the greater the agency conflicts are,the higher the probability of selecting the 0ff-site independent directors is.In other words,the off-site independent directors might result from the motivation of management or major shareholders to weaken the function of supervision.The impacts of off-site independent directors on corporate performance are mainly manifested in three aspects-cost,income and subsidy.The existence of off-site independent directors can significantly improve the agency cost and performance of the company and reduce the number of government subsidies.Moreover,different locations of listed companies have different impacts of off-site independent directors on business performances.It can be seen that there are advantages and disadvantages for listed companies to choose off-site independent directors,since it might improve business performance while increasing agency costs and reducing government subsidies at the same time.In addition,this paper puts forward some suggestions on the selection of off-site independent directors of listed companies based on literature analysis and empirical test,and makes corresponding research prospects as well.