Independent Director System: An Assistant Mechanism of Corporate Governance

Yurong Chen, Weixing Wang


As a system arrangement of the corporate governance, the independent director system has many deficiencies such as
the residual claimant right doesn’t correspond with the control right, the information occupations are not symmetric, the time and energy are not deficient, and the encouragement is not sufficient. In the practice that China introduces the independent director system, many obstacles such as the deficient legal references, and the shareholding structure of “dominant shareholder”, and the incompatibility with the supervisory board, deficient talents, and immature market mechanism still exist. So the introduced independent director system is only a kind of assistant mechanism of corporate governance, and it can not completely improve nonstandard corporate governance and protect small investors’ benefits
in listed companies.

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