TITLE:
The Proportion of Shares Held by the Largest Shareholder and the Proportion of Independent Directors
AUTHORS:
Xiaopeng Chu
KEYWORDS:
Major Shareholder, Largest Shareholder, Independent Directors, Structure of the Board of Directors, Shareholding Ratio
JOURNAL NAME:
Open Journal of Business and Management,
Vol.9 No.2,
March
29,
2021
ABSTRACT: In this paper, the relevant data of the proportions of major shareholders
and independent directors from 2008 to 2017 are examined. Firstly, the
functions of the board of directors and the role of independent directors are
introduced. Then, the impact of the institutional changes of the board of
directors on the proportion of independent directors is investigated. Next, the
determinants of the structure of the board of directors are reviewed. Thus, two
hypotheses are proposed. According to the regression results of the model,
hypothesis 1B presents positive significance. It can be concluded through the
influence of the largest shareholder’s shareholding ratio on the proportion of
independent directors in the board of directors that the higher the
shareholding ratio of the largest shareholder, the higher the proportion of
independent directors. By increasing the proportion of independent directors,
the voting space of non-independent directors will be squeezed, so as to
increase their control. This study reveals that the ownership structure is an essential
factor influencing the structure of the board of directors, constituting a
crucial supplement to the literature on the determinants of the structure of
the board of directors.