Research On The Functions And Value Effects Of Independent Directors Of Listed Companies In China

In China,the number of listed companies which appointed non-executive directors(NED)who have or had bank related background has been increasing,this phenomenon is related to the establishment of our country's laws and regulations and the nature of our country's capital market.At present,China's latest guidance on the performance of NED and guidelines on professional ethical requrements of banking financial institutions have not yet made clear guide about relevant part-time jobs.Except that,the construction of capital market in our country is still immature,the main approach to obtain funds for listed companies in our country is indirect financing,in which borrowing loans from Banks occupy big role.The expertise of NED which has bank related background is relatively simple--Credit,while which is always difficult for NEDs from other professional backgrounds to involve in.Whether the credit incentive is the substantial reason that the listed companies prefer to appoint the bank background NEDs?This article adopts the case study method,selecting Sinopec Shanghai Petrochemical Company Limited(SPC)as the case sample,explore the behind hiring motivations,the implementation of NEDs' functionsrs and the achieved value effects.The hiring motivations is mainly includes the credit rent-seeking and social network analysis;Functional performance mainly from supervision and consultation two aspects to analyse: supervise function mainly from the independent directors' s attendance at the meeting,dissent,executive compensation's supervision and the related party transactions' s supervision to identify and measure;consulting function is reflected from the equity financing,debt financing and financing cost support three aspects;The value effect of the entities' s business is reflected from the market performance and financial performance by comparing the before and after the appointment period.The case study of this paper finds that :(1)from the perspective of supervision function,the supervision role of NED which has bank related background is just in the form,substantial supervision is missed;(2)from the perspective of consulting functions,the advisory functions of NED which has bank related background are mainly reflected in the supporting to the financing for the company;(3)from the perspective of the value effects,while the NED which has bank related background provide financing support for the entity,the entity's operating performance is hard to get prominent improvement during the appointing period.In this paper,based on the results of the case study,some enlightenments have been concluded to provide references for the relevant theory and case studies.