The Impact of the Proportion of Independent Directors on Corporate Profitability—A Comparative Analysis Based on Wuliangye and ST Yanshi
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Keywords
corporate governance, comparison of two case studies, proportion of independent directors
Abstract
There are huge differences in the governance environments of different companies in China. State-controlled companies, which follow stricter governance rules, can provide a solid institutional foundation for independent directors to do their jobs. But some privately controlled companies have highly concentrated ownership and a situation where one shareholder dominates, so independent directors often end up as ‘figurehead directors’ and struggle to effectively supervise. This study uses a comparative double-case method and concludes that this reality makes the relationship between the proportion of independent directors and company profits not simply linear, but influenced by the overall governance environment of the company.
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