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Is there an expectations gap in the roles of independent directors? An explorative study of listed Chinese companies

Is there an expectations gap in the roles of independent directors? An explorative study of listed Chinese companies
Is there an expectations gap in the roles of independent directors? An explorative study of listed Chinese companies
This paper investigates whether an expectations gap exists in the control, strategic and resource provision roles that independent directors play in the corporate governance of listed Chinese firms and the factors that affect their performance of these roles. For this purpose, we interviewed Chinese executive directors, independent directors, institutional investors and stock exchange regulators. We find a performance gap but no reasonableness gap with respect to the control and strategic roles. The results suggest that the performance gap may be attributed to such factors as the ill-defined roles, independent directors' limited amount of time commitment and their lack of competence and objectivity. Interestingly, there is disagreement over the protection of minority interest as the objective of the control role. We find no consensus on the desirability, reasonableness and effectiveness of independent directors' resource provision role, perhaps because of a pejorative interpretation of this role as an exercise of guanxi.
1045-3172
206-222
Li, Pingli
a7bf0454-129f-46fa-bdf3-5bd940f569c4
Parsa, Sepideh
a2440f01-7c60-4041-ad81-636600d92ae4
Tang, Guliang
b362a043-c942-4e5d-ac0f-ceaba421104e
Xiao, Jason
66459675-7ff0-44b3-bb16-4d0dda2f06c4
Li, Pingli
a7bf0454-129f-46fa-bdf3-5bd940f569c4
Parsa, Sepideh
a2440f01-7c60-4041-ad81-636600d92ae4
Tang, Guliang
b362a043-c942-4e5d-ac0f-ceaba421104e
Xiao, Jason
66459675-7ff0-44b3-bb16-4d0dda2f06c4

Li, Pingli, Parsa, Sepideh, Tang, Guliang and Xiao, Jason (2012) Is there an expectations gap in the roles of independent directors? An explorative study of listed Chinese companies. British Journal of Management, 23 (2), 206-222. (doi:10.1111/j.1467-8551.2010.00727.x).

Record type: Article

Abstract

This paper investigates whether an expectations gap exists in the control, strategic and resource provision roles that independent directors play in the corporate governance of listed Chinese firms and the factors that affect their performance of these roles. For this purpose, we interviewed Chinese executive directors, independent directors, institutional investors and stock exchange regulators. We find a performance gap but no reasonableness gap with respect to the control and strategic roles. The results suggest that the performance gap may be attributed to such factors as the ill-defined roles, independent directors' limited amount of time commitment and their lack of competence and objectivity. Interestingly, there is disagreement over the protection of minority interest as the objective of the control role. We find no consensus on the desirability, reasonableness and effectiveness of independent directors' resource provision role, perhaps because of a pejorative interpretation of this role as an exercise of guanxi.

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e-pub ahead of print date: 17 January 2011
Published date: 2012
Organisations: Centre of Excellence in Decision, Analytics & Risk Research

Identifiers

Local EPrints ID: 368868
URI: https://eprints.soton.ac.uk/id/eprint/368868
ISSN: 1045-3172
PURE UUID: 30d585df-3b2f-4178-8bc0-329b668e97d3

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Date deposited: 16 Sep 2014 10:29
Last modified: 18 Jul 2017 01:42

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Contributors

Author: Pingli Li
Author: Sepideh Parsa
Author: Guliang Tang
Author: Jason Xiao

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