An Empirical Study on the Independence of Supervisory Board of Chinese Listed Company: A PLS Approach

Most of researches on Chinese supervisory board (SB) emphasize on the characters, such as the size, the structure, and the meeting number of SB and just linked the characteristics with firm performance, without reference to SB behavior and the relationship between SB status and independence of SB. This study develops a measurement instrument and proposes a model explaining relationship between SB and other corporate governance factors in Chinese context. Using partial least square (PLS) and a sample of four listed companies located in Henan province of China, the hypotheses were tested and findings are that: (I) SB status has an indirect negative effect on the independence of SB, and the management status serves as a strong mediator between the two constructs, (II) there is a high positive relation between management status and independence of SB, (III) BoD has a direct negative impact on independence of SB and management status, and SB is not independent of the Board.