Is There an Expectations Gap in the Roles of Independent Directors? An Explorative Study of Listed Chinese Companies

British Journal of Management, 2011

17 Pages Posted: 8 Mar 2012

See all articles by Pingli Li

Pingli Li

Southampton Business School, University of Southampton

Sepideh parsa

affiliation not provided to SSRN

Guliang Tang

University of International Business and Economics

Jason Zezhong Xiao

Cardiff Business School, Cardiff University

Multiple version iconThere are 2 versions of this paper

Date Written: March 4, 2012

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.

Suggested Citation

Li, Pingli and parsa, Sepideh and Tang, Guliang and Xiao, Jason Zezhong, Is There an Expectations Gap in the Roles of Independent Directors? An Explorative Study of Listed Chinese Companies (March 4, 2012). British Journal of Management, 2011 . Available at SSRN: https://ssrn.com/abstract=2015874

Pingli Li (Contact Author)

Southampton Business School, University of Southampton ( email )

Highfield,
Southampton, SO17 1BJ
United Kingdom

Sepideh Parsa

affiliation not provided to SSRN

Guliang Tang

University of International Business and Economics ( email )

No. 10, Huixin Dongjie, Chaoyang District
Beijing, 100029
China

Jason Zezhong Xiao

Cardiff Business School, Cardiff University ( email )

Aberconway building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

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