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Independent Directors and Corporate Performance in China: a Meta-Empirical Study

Author

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  • Wenge Wang

    (University of Auckland)

Abstract

This article reviews empirical studies on the relationship between independent directors and firm performance in Chinese listed companies. The purpose is to generalize empirical evidence on the theoretical claim that independent directors can improve firm performance by performing their monitoring role over management as expected by Chinese regulators. To fulfil this purpose, this article conducts a meta-empirical study by collecting 30 sample articles of existing empirical studies on the relationship between independent directors and firm performance in Chinese listed companies after the independent director institution has been introduced from corporate America to corporate China. The meta-empirical study is to review and generalize an integrated empirical evidence whether independent directors can improve firm performance in Chinese listed companies or not. Based on the statistical data from 30 collected sample articles, this article identifies four categories (board independence, independent directors? characteristic, background and compensation) that authors of 30 sample articles use to test the correlation between independent directors and firm performance in Chinese listed companies. From the integrated empirical evidence from 30 collected sample articles, this article finds on the whole that board independence has no significant impact on firm performance, that independent directors? characteristics and background have a controversial effect on firm performance and that independent directors? compensation has a significant positive effect on firm performance. This may suggest that independent directors may primarily play an advisory role but not a monitoring role in Chinese listed companies.

Suggested Citation

  • Wenge Wang, 2014. "Independent Directors and Corporate Performance in China: a Meta-Empirical Study," Proceedings of Economics and Finance Conferences 0401247, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:0401247
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    References listed on IDEAS

    as
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    Cited by:

    1. Li, Ke & Lu, Lei & Mittoo, Usha R. & Zhang, Zhou, 2015. "Board independence, ownership concentration and corporate performance—Chinese evidence," International Review of Financial Analysis, Elsevier, vol. 41(C), pages 162-175.
    2. Liliana Nicoleta Simionescu & Ştefan Cristian Gherghina & Hiba Tawil & Ziad Sheikha, 2021. "Does board gender diversity affect firm performance? Empirical evidence from Standard & Poor’s 500 Information Technology Sector," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-45, December.
    3. Liu, Yu & Miletkov, Mihail K. & Wei, Zuobao & Yang, Tina, 2015. "Board independence and firm performance in China," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 223-244.
    4. Gong, Min & Wang, Yanan & Yang, Xiandong, 2021. "Do independent directors restrain controlling shareholders’ tunneling? Evidence from a natural experiment in China," Economic Modelling, Elsevier, vol. 94(C), pages 548-559.
    5. Wen, Wen & Cui, Huijie & Ke, Yun, 2020. "Directors with foreign experience and corporate tax avoidance," Journal of Corporate Finance, Elsevier, vol. 62(C).
    6. Al-Faryan, Mamdouh Abdulaziz Saleh, 2021. "The Effect of Board Composition and Managerial Pay on Saudi Firm Performance," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Online fi.
    7. Changzheng Zhang & Jiao Zhang & Qian Guo, 2018. "Can Political Connections Of Independent Directors Improve Firm Perfomance? Evidence Of Chinese Listed Manufacturing Companies Over 2008 - 2013," Malaysian E Commerce Journal (MECJ), Zibeline International Publishing, vol. 2(2), pages 5-12, January.
    8. McGuinness, Paul B., 2021. "Board member age, stock seasoning and the evolution of capital structure in Chinese firms," International Business Review, Elsevier, vol. 30(3).
    9. Meng, Yijun & Clements, Michael P. & Padgett, Carol, 2018. "Independent directors, information costs and foreign ownership in Chinese companies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 53(C), pages 139-157.
    10. Shivan Sarpal, 2015. "Determinants of Corporate Board Independence: Empirical Evidence from India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 40(1-2), pages 52-74, February.
    11. Yuan Chang & Pang-Tien Lieu, 2016. "Independent Director, Executives Compensation and Corporate Performance-Correcting Self-Selection Bias by Matching Methods," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(8), pages 156-156, August.

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    More about this item

    Keywords

    Independent directors; corporate performance; Chinese listed companies;
    All these keywords.

    JEL classification:

    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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