The Design Of Independent Director System And Tunneling Behavior Of Large Shareholders

Transformation of domestic enterprises leads to the highly concentrated ownership structure,so the introduction of independent director system to solve the problem of large shareholders encroaching on the interests of minority shareholders.However,descriptive indicators of independent director system in the existing research are not systematic.Most of them adopt the aggregate measurement method of the proportion of independent directors,or only check the single index and selective subset of these attributes.There is little systematic institutional framework.This makes the research results limited and contradictory.In addition,researchers have been seeking to examine the overall supervisory capacity of independent directors without fully realizing that individual independent director is an essential component of the overall supervisory potential.Starting from the formal system design of independent directors,this paper studies whether the selection and appointment system design will affect the tunneling behavior of large shareholders and the supervision behavior of independent directors,and how it will affect the actual supervision efficiency of independent directors.Afterwards,we add the informal system of independent directors-reputation system as a regulator to study whether it has a significant moderating effect on the main effect and intermediary effect.The results show that:(1)in the benchmark experiment setting,independent directors are more likely to choose higher supervision level,and large shareholders are more likely to choose lower tunneling intensity.The addition of independent directors'selection and appointment mechanism aggravates the tunneling behavior of large shareholders.Large shareholders tend to choose independent directors with weak supervision intentions,while independent directors will give lower supervision expectations in order to cater to the large shareholders,but the expectations of independent directors will increase after the introduction of reputation system,and large shareholders will avoid choosing independent directors with poor reputation.(3)The tenure of independent directors will affect their supcrvisory behavior and consequently affect the tunneling of large shareholders,and the influence coefficient of tenure on the tunneling of large shareholders is greater in the case of selection and appointment;part-time enterprises' number of independent directors is positively related to the tunneling behavior of large shareholders;with the increase of the number of part-time enterprises,the tunneling behavior of large shareholders will be strengthened;when the nomination of independent directors,considering that independent directors may be punished for their tunneling behavior,due to the increase of guilt,their tunneling behavior has been restrained;(4)reputation system has a significant moderating effect on the impact of independent director system on large shareholders tunneling;(5)female independent directors are more effective than male independent directors.It tends to give a lower degree of supervision and lead to more serious tunneling behavior of large shareholders,but reputation system greatly alleviates the influence of the gender of independent directors on their choice of supervision behavior.The main innovations of this study are as follows:Firstly,using game theory and comparative institutional experimental methods to break through the traditional research paradigm,depict the actual situation of the role of formal and informal independent director system better,and compare the effect of different institutional arrangements and combinations on the willingness of independent directors to supervise.Second,Use new methods to measure independence and make up for existing research vacancies.The existing literature and regulatory policies mainly focus on the formal independence of independent directors,while the substantive independence,due to difficulties in identification and judgment,presents a relatively vague state in research and regulation.This paper uses an experimental method to measure whether the substantial independence of independent directors will be affected by the selection system(nomination,tenure,concurrent)when there is no formal relationship between independent directors and major shareholders.Thirdly,preferential reputation research.Change the perspective to correct the situation limitations in the existing reputation research.