The Signal Effect Of Abnormal Resignations Of Independent Directors In China

Because of China's unique national conditions,the independent directors in China could not do the supervision effectively.Recently,there occurs frequent independent directors' resignations and there may be some deep information hidden behind the resignation of independent director.Based on the previous studies,some factors in corporate governance raise the probability of the leave of independent directors.And some conclusions have been made that the abnormal resignation of independent directors has brought negative effects to the stock price.In this paper,we will discuss the possible negative information behind their leave according to the actual situation of our country.The object of this research is the situation of independent directors' resignations for "personal reasons" or unexplained reasons.And we classify this kind of object as the case of independent director's abnormal resignation.This paper collected 167 samples of abnormal resignations of independent directors in 2015.Based on the method of factor analysis and logistic regression model,this paper studies which factors in corporate governance can significantly increase the probability of independent directors leaving.And on the other hand,the paper studies whether the abnormal resignation of independent directors means there will appear any problem in the company.This paper finds that the larger scale of executives in the companies and the higher salary of core executives will lead to a greater probability of independent abnormal resignation.On the other side,after the abnormal resignation of independent directors,the probability of lower-quality financial report of the company will also increase significantly afterwards.In addition,for independent directors with different backgrounds,the impact on the probability of occurrence of negative news is also different.Among them,the leave of independent directors with financial and legal background has significantly increased the probability of a lower-quality financial report afterwards.Finally,this paper does further study in extreme situations.It is found that for the companies with more than one independent directors leaving in the same year,the probability of irregularities is greater,and the probability of a lower-quality financial report is even greater.