Abstract
This article explores the board independence of listed companies in the US and China – an ongoing and important issue of corporate governance concerning the true independence of independent directors from management in both countries. It aims to identify what elements have an impact on board independence and examine how these influence the independence of independent directors. Four elements, independence from management; dependence on shareholders; access to information; and incentive to monitor, may have a substantial influence on board independence and align with the in-fact independence of independent directors. This article examines how and why these four elements have an impact on the effectiveness of the role of independent directors in monitoring top management and lead to independent directors failing to be truly independent of management. To support this argument, this article also investigates the efficiency and effectiveness of independent directors serving as a governance mechanism in terms of board independence in Chinese listed companies. The aim was therefore to scrutinise whether independent directors in Chinese listed companies are truly independent from management. Based on statistics calculated on data collected from CSMAR, there appears to be little evidence that independent directors serve as a governance mechanism in monitoring top management in Chinese listed companies, which thus shows that independent directors are not independent in China. The implications arising from this article are that solutions addressing the four elements that have an impact on board independence will enable independent directors to become truly independent.
Top management and the adoption of energy efficiency practices: Evidence from small and medium-sized manufacturing firms in the US
