A Cognitive Study on the Selection of Independent Directors in Taiwan: Survey from Chairpersons of Electronic Industries
Date Issued
2012
Date
2012
Author(s)
Huang, Shu-Chun
Abstract
Prior research of independent directors in Taiwan’s listed companies has focused on the relationship between corporate performance and independent directors. However, much less has focused on the actual considerations in the selection of independent directors.
Independent directors have to be nominated by the board before their final approval by the shareholders’ meeting. During this process, corporate chairpersons have significantly influenced not only in the nomination but also on the subsequent participation of independent directors in the board.
In order to have in-depth understanding of the practical considerations of selecting their independent directors, this study utilizes Delphi Method to conduct semi-structured interview with a sample of 21 chairpersons of listed companies in electronic industry.
The findings of this study indicate these chairpersons have a preference to select independent directors based on their reputation and familiarity.The expectation of performance for independ directors emphasizes more on their advisory and networking functions than their functions on behavioral control and output control.
This study suggests regulatory agencies should consider supplementary measures to facilitate the implementation of corporate governance. In the meantime, the regulators should also enhance and encourage corporate directors’ (including chairpersons) and investors to participate in training programs for them to understand better the benefits of corporate governance. When the relationship of independent directors and corporate decision quality can be recognized, it will strengthen further the effectiveness of selecting independent directors and the functions of the board.
Subjects
Corporate Governance
Board of Directors
Independent director
Agency Theory
Electronic Industries
Compensation Committee
Audit Committee
Type
thesis
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