The Influence Of The Resignation Of OfficialIndependent Directors On Corporate Risk-taking

According to the traditional functional view,independent directors mainly play two functions of supervision and consultation in corporate governance,among which the focus is to supervise the interests of controlling shareholders and management to tunneling and protect the interests of minority shareholders.But due to the special national conditions of China,the effectiveness of the independent director system has been questioned.In China,it has always been a common choice for listed companies to employ retired government officials as independent directors to build a relationship with the government and seek policy resources.China's economy is in the transitional period at the present stage,and relevant laws and regulations are not yet perfect.As an independent director,officials are prone to corruption,which is not conducive to the establishment of a clean and upright political and business relationship.In order to strengthen cadre management and fight corruption and promote integrity,the Organization Department of the CPC Central Committee issued the "opinions on further standardizing the part-time employment of leading party and government cadres in enterprises" on October 19,2013,which further restricted the employment of officials in enterprises.The document clearly stipulates that party and government officials who are in their current posts and who are not in their current posts but have not gone through retirement procedures are not allowed to take part-time jobs in enterprises.After the release of the document,a large number of independent directors of officials resigned from their companies.Enterprises are always faced with risks in the process of operation and development.An enterprise's ability to bear risks determines whether it can achieve long-term development.High-risk commitment can accelerate the accumulation of social capital,promote technological progress,and the social economy can continue to grow.The 'forced' resignation of the independent directors of the officials will inevitably bring a certain impact on the risk level of enterprises.In order to explore the economic consequences of the resignation of independent directors of officials,this paper selected companies listed in Shanghai and Shenzhen stock exchanges from 2012 to 2017 with the resignation of independent directors as the research object,collected and sorted out the resignation notices of independent directors,and analyzed the impact of the resignation of independent directors of officials on corporate risk taking by combining normative research and empirical analysis,and investigated the different impact of the administrative level of independent directors of resigned officials on the level of risk taking.Furthermore,this paper analyzes the differences of the influence of the resignation of independent directors on enterprise risk taking under different enterprise nature and marketization level.Furthermore,this paper analyzes the differences of the influence of the resignation of independent directors on enterprise risk taking under different enterprise nature and marketization level.The research findings of this paper are as follows:(1)The correlation coefficient between the resignation of officialindependent directors and corporate risk taking is significantly negative,indicating that after the publication of No.18 document of the organization department of the CPC Central Committee,the forced resignation of independent directors of officials leads to a significant decline in corporate risk taking level;(2)The resignation of independent directors with higher administrative rank has greater negative impact on enterprise risk taking level;(3)After distinguishing the nature of property rights,the resignation of independent directors of officials has a more significant negative impact on the risk taking level of non-state-owned enterprises compared with state-owned enterprises;(4)After distinguishing the marketization level,compared with regions with high marketization level,the negative impact of the resignation of independent directors on enterprise risk taking is more significant in regions with low marketization level.This paper is divided into the following six parts:The first part is the introduction,which mainly introduces the background and significance of this paper,expounds the research ideas and main contents,and introduces the innovation points of this paper.The second part is literature review.On the basis of reviewing domestic and foreign literature,it summarizes the existing studies on independent directors of officials and corporate risk taking,and makes a summary and comment on the literature.The third part is the theoretical analysis and hypothesis proposal.Based on the definition of relevant concepts,through the analysis of basic theories,this paper analyzes the impact of resignation of official independent directors on the company's risk bearing level,and puts forward the corresponding research hypothesis.The fourth part is the research design of this paper,which mainly introduces the data source and sample selection of this paper,and explains the variables and model design used in the study.The fifth part is empirical analysis.Descriptive statistics,correlation analysis and inter-group comparison test are carried out for the study samples in this paper,and the empirical test results of the research hypothesis are analyzed,and finally robustness test is conducted.The sixth part is the research conclusions and Suggestions,which summarizes the research conclusions of this paper,puts forward relevant policy Suggestions,and discusses the shortcomings of this paper.The innovation and contribution of this paper are mainly reflected in the following three aspects.Firstly,this paper enriches the research on the economic consequences of the resignation of independent directors.Based on document no.18 of the organization department of the CPC central committee,this paper studies the impact of the resignation of independent directors of officials on enterprise risk taking,and the research conclusion adds new evidence to understand the economic consequences of the resignation of independent directors of officials.Secondly,this paper complements the relevant research on the factors affecting enterprise risk taking.From the perspective of the mandatory resignation of the independent director of the official,this paper enriched the relevant literature on the factors affecting enterprise risk taking.Finally,the research conclusion of this paper also has important practical significance,which provides valuable reference for improving the independent director system,reasonably arranging the level of enterprise risk taking,and improving the external environment of enterprise development.