A Comparative Review of Independent Director Systems in China and Abroad

Zihan Wang ()
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Zihan Wang: Jiangxi University of Finance and Economics, School of Finance

A chapter in Proceedings of the 2025 3rd International Conference on Digital Economy and Management Science (CDEMS 2025), 2025, pp 646-660 from Springer

Abstract: Abstract Independent director systems have been widely adopted globally as a key corporate governance mechanism. The independent director system serves as a critical governance mechanism to mitigate principal agent conflicts, enhance corporate transparency, and protect minority shareholders’ interests. This paper conducts a comparative analysis of the institutional evolution and functional effectiveness of independent director systems in China and abroad (mainly focusing on the USA). By tracing historical trajectories, the study reveals divergent developmental pathways: the U.S. system evolved through crisis-driven regulatory reforms, transitioning from advisory roles to shareholder-centric monitoring frameworks, while China’s system emerged via policy experimentation and legal hybridization, integrating global best practices with domestic regulatory needs, embedding imported norms within its Party-led governance structure. Key findings highlight structural contrasts between the two systems— such as China’s dual oversight system (independent directors and supervisory boards) versus the U.S.’s single board model and identify persistent challenges, including role ambiguity, accountability-reward dissonance, and institutional redundancy in China. Empirical evidence from landmark cases (e.g., the Kangmei scandal) underscores systemic vulnerabilities in China’s implementation. The paper explores future trends, advocating for the modernization of nomination mechanisms, eco- nomic interest decoupling, and systemic risk mitigation. These insights contribute to understanding the contextual contingency of governance frameworks and offer policy recommendations for institutional convergence and functional optimization. Overall, this comparative review highlights the need for tailored governance reforms that balance global standards with local contexts.

Keywords: Independent Director; Corporate Governance; Comparative Institutional Analysis; China-U.S. Comparison; Accountability Mechanisms (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-770-0_74

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DOI: 10.2991/978-94-6463-770-0_74

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