Independent Directors and Their Constraints in China and India
Jindal Global Law Review, Vol. 2, Iss. 2, p. 129, March 2011
27 Pages Posted: 19 Mar 2010 Last revised: 10 Mar 2015
Date Written: March 14, 2010
Although the concept of the independent director evolved in the US and the UK (that are outsider systems with companies maintaining diffused shareholding), it has been transplanted to several other countries (including those that are insider systems with concentrated shareholding). The recipients of the concept include the two leading emerging economies of China and India. Available empirical studies have been pessimistic regarding the role that independent directors can play in these countries as compared to the US and the UK where the concept originated. This article discusses the various constraints operating in China and India that undermine the efficacy of independent directors. The wide spectrum of constraints comprises structural, legal, cultural, political and perceptional constraints. A study of these concludes with some pointers for reform in China and India so as to bolster the independent director institution as a measure of enhanced corporate governance.
Keywords: Independent directors, corporate governance, agency problems, China, India
JEL Classification: G38, K22
Suggested Citation: Suggested Citation