The researches on the voluntarily election of independent directors/independent supervisors and on the market responses to announcements of companies about electing independent directors/independent supervisors soon
Date Issued
2004
Date
2004
Author(s)
Chi, Pang-Tsan
DOI
zh-TW
Abstract
On October 2001, the Legislature Yuan passed the amendment of Company Law. According to the new version of Company Law, it is not necessary that directors and supervisors of a company are also shareholders of it. The Taiwan Stock Exchange Corporation (“TSEC”) and the Republic of China GreTai Securities Market (“GTSM”) then amended the criteria for review of securities listings and the securities exchange criteria governing review of securities traded on Over-the-Counter (“OTC”) markets, which requires that companies applying initially for listing of its stock before February 22, 2002 or trading securities at OTC markets before February 25, 2002 shall elect independent directors/independent supervisors. At the same time, TSEC and GTSM also jointly adopt the” Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies.” TSEC and GTSM hoped to put the system of independent directors/independent supervisors into practice totally by these two ways and realize the objective of the Competent Authority: making 2002 “the Year of Corporate Governance.”
It is important for policy making to refer relative native researches at the trial step of the system of independent directors/independent supervisors. This thesis, therefore, tries to find characteristics of companies that elect independent directors/independent supervisors voluntarily(that is, companies applying for listing before February 22, 2002 or trading securities at OTC market before February 25, 2002 ) and observe the market responses to announcements of companies about electing independent directors/independent supervisors soon empirically. By doing so can we realize the benefit of this system to Taiwan and make some suggestion to policy makers.
First of all, this thesis uses the data of the amount of independent directors/independent supervisors of companies of Taiwan Economic Journal Co. (TEJ) as proxy for dependent variable: companies elect independent directors/independent supervisors or not, and uses the companies’ financial data of TEJ as independent variables. Binary logistic regression model is used to analyze the relation among the dependent variable and independent variables. Secondly, this thesis computes the abnormal returns resulting from announcements of companies about electing independent directors/independent supervisors soon. These announcements are found in the Market Observation Post System. Finally, multiple regression model is used to analyze the relation among the cumulative abnormal returns (CARs) and several explanation variables.
The research findings are as follows:
I.Companies that elect independent directors/independent supervisors have higher proportion of insider shareholdings, lower ratio of long-term debt to total assets, smaller firm size, larger growth opportunities, higher possibility of issuing stock in cash or debt in the future, worse operating performance, larger amount of supervisors, and higher ratio of receivables to total assets. Companies that belong to electronic industry are more likely to elect independent directors/independent supervisors than others.
II.The abnormal returns resulting from announcements of companies about electing independent directors/independent supervisors soon almost are negative.
III.For companies that have higher degree of concentrated shareholding structure, smaller amount of supervisors, and larger firm size, the CARs resulting from announcements of companies about electing independent directors/independent supervisors soon are larger. If these announcements occurred with announcements of affairs about the meeting of shareholders, the CARs are larger, too.
Subjects
異常報酬率
獨立董事
代理問題
獨立監察人
Abnormal Returns
Independent Supervisors
Independent Directors
Agency Problem
Type
other
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