Nature Of Property Right?High Reputation Independent Directors And Sensitivity Of Executive Compensation Industry

In 2001,China Securities Regulatory Commission(CSRC)issued the guidance on the establishment of independent director system in listed companies,which stipulates that listed companies should establish an independent director system.The original purpose of the independent director system is to balance and supervise the power of the management to safeguard the interests of investors.However,whether the independent director system can improve the efficiency of corporate governance and protect the interests of small and medium-sized investors,It has always been a controversial topic.Article 37 of the newly revised guidelines on Governance of listed companies in 2018 by the China Securities Regulatory Commission stipulates that "independent directors shall safeguard the interests of listed companies and all shareholders,paying particular attention to the protection of the legitimate rights and interests of small and medium-sized shareholders",Article 38 stipulates that "independent directors on remuneration and assessment committees shall occupy a majority and act as convenors".According to the current incentive mechanism of independent directors in China,compensation mechanism and legal mechanism can not play a role,therefore,independent directors mainly rely on reputation incentive mechanism to play their role.Based on this,this paper selects the relevant data of the A-share listed company in Shanghai and Shenzhen in 2012-2017 as the research sample,and measures the management environment of the company with high reputation and independent directors,and investigates the effect of the high reputation independent director on the performance sensitivity of the executive compensation.And whether there is a significant difference between the high-reputation independent director and the executive compensation performance sensitivity of the high-reputation independent director and the executive compensation performance sensitivity under different property rights according to the property of the property right.The empirical results show that(1)the addition of independent directors of high reputation in the board of directors has enhanced the sensitivity of executive pay performance;(2)the addition of independent directors of high reputation in the compensation committee has enhanced the governance function of the board and raised the sensitivity of the executive pay performance;(3)Whether state-owned enterprises or non-state-owned enterprises,the addition of high-reputation independent director can improve the sensitivity of executive pay performance,and there is no significant difference between the two..The above conclusion shows that the reputation mechanism has a significant effect on the independent director performance,and the independent director of the high reputation plays an active role in the corporate governance.Provide reference for the selection of independent directors in our country.