独立董事制度：我国公司治理发展的新篇章--外文翻译.doc

外文翻译Independent Directors: A New Chapter of the Development of Corporate Governance in ChinaMaterial Source: JIANQIAO UNIVERSITY Author: Helen Wei HuThis paper examines the development of corporate governance in China, with a focus on independent directors. Corporate governance is regarded as the core of the ongoing State-Owned Enterprises (SOEs) reform, and the newly introduced independent director system is viewed as a revolutionary change to the Chinese corporate governance development.This paper analyses the characteristics of independent directors in the Chinese context, proposes five internal factors that would affect independent directors performance, namely independence, remuneration, qualification, assurance and autonomy. It is suggested that these factors are essential for independent director system to work effectively, and hence will lead to better board performance.1 IntroductionChina launched a major economic reform and liberalisation program in 1978, which transformed the planned economy to a market economy. Since then, the reform of state-owned enterprises (SOEs) has been considered the key to the success of Chinas economic growth. In 1992, the Chinese government reformed its SOEs through corporatisation, and the concept of “modern enterprises” was introduced accordingly. During this process, the separation of state ownership and control was adopted, and company managers were granted fourteen control rights in July 1992. However, with increased managerial autonomy and unclearly defined property rights, the agency problem of Chinese managers was more serious than that in Western countries.Insider control problems occurred during the SOE reform. Examples of these problems include collusion between managers and workers; transferring firm assets from the state-owned enterprise to non-state-owned enterprise; tax evasion and corruption among SOEs managers, and ultimately led to poor firm performance. In fact, the existence of insider control problem can be explained by the fundamental principle of agency theory, which is the conflict of interests between the principal (owner) and the agent (manager). Hence, an effective control mechanism needs to be in place that not only maximises shareholders interests, but also reduces the cost of monitoring. By addressing insider control problems and poor SOEs performance, many Chinese researchers urge the need for an efficient corporate governance system. Moreover, after Chinas entrance into the World Trade Organization (WTO) in December 2001, Chinese companies became exposed to the opportunities and challenges of todays international market. In order to remain competitive and attract more financial and human capital, Chinese authorities see the urgent need for sound corporate governance.However, empirical studies from the West show that good corporate governance has no direct impact on financial performance. But, sound governance provides improvement when the company is under-performing due to poor management, or leads to a better performing board. From the study of bankrupt firms and hostile takeover, results suggest that good corporate governance is positively related to the successful reorganization of a financially distressed firm, or reduce the probability of a firm paying greenmail.2 Theoretical background of the development of independent director System In most transition economies, insider control problems exist when the government hand-over its control rights to the management. Due to the absence of external market control mechanism and inefficient internal monitoring system in China, management tends to have stronger autonomy in business operation and decision-making. As agency theory argues that individual is driven by opportunistic behaviour, thus, managers would engage in self-interest serving instead of maximising shareholders returns.In the case of Chinese joint stock companies, it is found that over 1,200 listed companies in China to date, about 80% to 90% came from the restructuring of SOEs, and the state still owns about 50% shares of the listed companies. Under the “socialist market economy” background, central and local government agencies tend to carry out shareholder functions, appoint directors to the board and give direction to firm management. Many researchers argue that the interest of the state shareholders might not be the same as that of other institutional or individual shareholders. Because government might be more interested in pursuing social and political goals instead of profit maximisation.Obviously, a firm is either controlled by insiders or the state shareholder, without proper monitoring from outsiders is not healthy for the development of countrys economy. In August 2001, the China Securities Regulatory Commission (CSRC) released the “Guidelines for Introducing Independent Directors to the Board of Directors of Listed Companies” (CSRC, 2001; hereafter referred to as the “Guideline”) to strengthen the importance of board independence, and protect the interests of nearly 60 million Chinese shareholders. Four months later, the “Code of Corporate Governance for Listed Companies in China” (CSRC, 2002; hereafter referred to as the “Code”) was introduced to further speed up the development process, and hence improve individual companys corporate governance practice.After introducing the independent director system, the remaining question is, “Will firm have better performance by having independent directors on the board?” Studies from the West show that there are some controversial views on the effectiveness of board independence in relation to firm performance.On the one hand, some researchers agree that independent directors do have a positive relationship on firms corporate performance. Early work by Fama and Jensen contends that independent directors provide a means to monitor management activities through an increased focus on firm financial performance. Lee, Rosenstein and Rangan support this view, provide evidence that boards dominated by outside directors are associated with higher returns than those dominated by insiders. Similarly, Pearce and Zahra point out that there is a positive correlation between the proportion of independent directors and firm financial performance. Baysinger and Butler report that changes in board composition over a ten-year period from 1970s to 1980s appear have a causal relationship with accounting performance. In addition, Millstein and MacAvoy find a statistically significant relationship between active, independent boards and superior firm performance.On the other hand, Furthermore, Rosenstein and Wyatt argue that insiders are more effective because they have superior knowledge of the firm and its industry than outside directors, and they are just as diligent as outside directors, given their legal responsibilities and their own interests in the firm. Similarly, Bhagat and Black also state there is no convincing evidence suggesting that greater independence results in better performance, but some evidence shows that firms with supermajority independent directors perform worse than others.From the above discussions, it is obvious that scholars have not reached a consensus view of the board composition in the corporate governance literature. Moreover, the importance of independent directors as a governance mechanism to protect shareholders interests and safeguard managerial employment contracts is recognised worldwide. For instance, the OECD Principles of Corporate Governance suggests that companys board should provide independent and objective judgements on corporate issues, apart from the management. The Combined Code and the Higgs report believe independent directors are essential for protecting minority shareholders and can make significant contribution to firms decision-making. They indeed recommend that half of the board members, excluding the chairman, should be independent.3 ConclusionBy seeing the significance of independent directors, the Chinese authorities took the step, and a new chapter of corporate governance just began. In the past, few listed companies had independent directors as board members, company decisions were either made by the management or the controlling shareholder without any monitoring mechanism from outsiders. Ultimately, poor performance was resulted due to firms inefficient corporate governance system, especially the low productivity and profitability of SOEs compared with that of township and village enterprises (TVEs), collective-owned, foreign invested and private enterprises.In order to increase the effectiveness of the internal control mechanism, enhance the independence of boards of directors, the independent director system was introduced to Chinese listed firms. However, independent directors will not function effectively if some basic criteria are not met. This study shows there are five important factors that need to be considered in the independent directors performance model. Firstly and most importantly, is the “independence” of directors. In country like China, with the concentrated ownership structure and serious insider control problems, for independent directors to monitor firms major related transactions without minority shareholders interests being infringed, the basic element of “independence” must be fulfilled. Directors should be independent not only from the management, but also from the controlling shareholder. If independent directors have close relationship with any of them, they are not truly independent. Consequently, independent judgement or fair opinion is unlikely to be delivered, and interests of minority shareholders are less likely to be well protected. Therefore, “independence” is the prerequisite in order for the whole independent director system to take off. Secondly, from the perspective of motivation theory, money is often equated with the lowest level of needs, or important hygiene factor to prevent dissatisfaction. But others argue that money is important and it has a direct impact on satisfaction. The more income an independent director receives from his job, the more efforts he is likely to put in. In China, with no other payments such as shares or stock option available in the market, a sufficient incentive is necessary in order to attract good candidates and better align independent directors interests with those of shareholders.Thirdly, sufficient knowledge is required in order for independent directors to make sensible judgement. With independent directors responsibility of handling companys related party transactions, their understanding of business know-how, product and financial knowledge is essential. Otherwise, they can be easily manipulated by the company or making irresponsible decisions. However, the current pool of independent directors is mainly drawn from academics or government departments, whom may lack of experience in dealing with business decisions of public listed firms. It is suggested that in order for independent directors to perform effectively, relevant training must be given and experienced foreign talents should be encouraged.Fourthly, it is argued that in the absence of D&O liability insurance, it is very difficult to expect independent directors to play an active role. In fact, with increased job responsibilities, insurance becomes more important to indemnify directors from negligence, error, breach of duty and so on. To encourage independent directors to provide objective opinion, it is possible that they may need to stand up and against managements decisions, so sufficient assurance must be given. Under the current situation, it is important to see how soon the D&O insurance system can be implemented to Chinese listed firms.Finally, for independent directors to function properly, great autonomy and resources are necessary.In summary, this paper analyses five internal factors that play key roles in the effectiveness of the independent director system. Nevertheless, there are other board characteristics like board structure, board size; board meetings and CEO role duality will also affect the performance of independent directors. In addition, the effectiveness of the external market control mechanisms, the implementation of the legal system and the development of human capital market are all vital to the success of independent director system. Further research in these areas will be beneficial to the development of corporate governance in China.译文独立董事制度：我国公司治理发展的新篇章资料来源：剑桥大学机构知识库 作者：海伦.威.胡本文审视了我国公司治理的发展历程，并着重介绍了独立董事制度。公司治理改革被认为是正在进行的国有企业改革的核心，引进独立董事制度，对中国公司治理的发展是一种革命性的变化。独立董事制度在中国的环境中，有五种影响其性能的内部因素，即独立性、报酬、资格、保证和自治。控制好这些因素，才能使独立董事制度有效运行，发挥更好的性能。1 介绍中国在1978年发起了大规模的经济体制改革和自由化项目，使得计划经济开始向市场经济转变。从那时起，国有企业改革一直被认为是中国经济快速增长的成功关键。1992年开始，中国政府开始改革，通过了“国有企业现代化”的概念，并介绍了相应的改革方法。在这个过程中，国家所有权和控制权逐步分离，并且公司经理被授予控制权。然而，随着管理自治和产权制度改革，中国的经理面临着比西方国家经理更严重的代理问题。内部人控制是国有企业改革中出现的问题。这些问题的例子包括管理者和员工之间的相互勾结，将公司资产从国有企业向非国有企业非法转移；国有企业的管理者的逃税和腐败，这些原因最终导致公司业绩的低落。事实上，内部人控制问题可以用委托代理理论的基本原理来解释，其实是委托人和代理人之间的利益冲突。因此，一个有效的控制机制需要的是，最大化地股东利益的同时，降低生产成本的监测。通过对内部人控制问题的深入了解，许多学者们敦促，需要一种有效的公司治理制度。此外，中国在2001年进入世界贸易组织，中国公司将暴露在国际市场的机遇和挑战下。为了保持竞争力，吸引更多的财力、人力、资本、中国上市公司迫切需要良好的公司治理结构。然而，西方实证研究表明，良好的公司治理不直接影响财务业绩。但是，公司治理对表现不佳的公司提出改进措施时，也有提高了其业绩的例子。本文对香港因被敌意收购导致破产的公司的研究显示，良好的公司治理与财务重组成功率呈正相关。2 独立董事理论的发展背景大多数经济转型国家都有内部人控制的问题存在，由于中国外部市场控制不足和内部监控系统效率低下，管理者具有较强的自主经营决策权倾向。因此，管理者做事以自身利益为准则，而不是千方百计地使股东利益达到最大化。到目前为止，在我国股份制公司中有超过1200家上市公司，其中大约80至90的来自重组的国有企业，国家仍然拥有大约50的上市公司股份。“社会主义市场经济”的背景下，中央和地方政府机构倾向由控股股东指定董事。许多研究者认为国家利益股东和个人股东利益是不同的，因为政府感兴趣的是社会和政治目标而不是利润最大化。很明显，公司的控股股东应当受到监控，没有进行适当的监控是不健康发展的经济。2001年8月，中国证券监督管理委员会发布了关于在上市公司建立独立董事制度的指导意见，介绍独立董事董事会对上市公