Will the Independent Director Institution Work in China?(2)


SiBao Shen


III. IMPORTATION TO CHINA
A. Following the Trend
Not until the early 1990s did developed countries other than the United States, e.g., Canada, the United Kingdom, and Australia, begin to lay down detailed provisions on the ratio, credentials, roles, and responsibilities of independent directors.[48] The trend of establishing the independent director institution spread to developing countries in the late 1990s.[49] The Asian financial crisis gave developing countries, especially Asian emerging-market countries, a lesson on the importance of a sound corporate governance system. India, Malaysia, Thailand, Korea, Philippines, Singapore, and Mexico all made stipulations concerning independent directors on the board of directors of listed companies within several years.[50] China also followed this trend.
The concept of the independent director appeared, for the first time, in the Guiding Opinion for Listed Corporations, Articles of Incorporation issued by the CSRC in December 1997. It suggests that listed corporations may retain independent directors at their option. The 1993 Corporation Law of China does not specially address independent directors. Before the CSRS,s Guiding Opinion was published, provisions concerning independent directors were scattered in various rules and regulations. The Guiding Opinion for Governance of Listed Corporations, issued by the Shanghai Stock Exchange on November 3, 2000, suggests that there should be at least two independent directors, and the number of independent directors should account for at least 20% of the entire board membership.
On August 6, 2001, the CSRC issued the Opinion, requiring each listed corporation to have at least one third of its board comprised of independent directors prior to June 30, 2002. Of these independent directors, at least one must be an accounting professional. The Opinion assigns more powers to independent directors than regular directors. Independent directors have the right to, among other things, approve or disapprove of any major conflict of interest transactions, make recommendations to hire or dismiss auditors, hold board meetings, and request that the board hold interim shareholders, meetings. Independent directors shall also provide their opinions regarding the following important matters: nomination, appointment, and dismissal of directors and senior executives; compensation of directors and senior executives; and any large loans. To exercise their powers, independent directors can independently retain outside counsel, such as auditors and lawyers. #p#分页标题#e#
Chinese regulators have high expectations for the independent director institution to resolve the corporate governance problems which have entangled the listed corporations since corporation reform began in the early 1990s. The regulators, particularly the CSRC, have hailed the establishment of the independent director institution as a key step towards improving corporation governance. In February 2004, the State Council of China issued "Some Opinions on Promoting the Reform, Opening and Steady Growth of the Capital Market."[51] This document strengthens the importance of independent directors in the reform and development of China,s capital market.
B. Roles of Independent Directors in Corporate Governance
The shareholding structures of China,s listed corporations are far different from the ones in the United States. Instead of dispersed shareholding, the shareholdings of Chinese listed corporations are highly concentrated.[52] The state or state-owned enterprises hold significant percentages of shares of most listed corporations.[53] According to one study, the largest shareholding stake in listed corporations’ average close to 50% compared to the second largest shareholder, who typically owns less than 10%.[54] As may be expected, controlling shareholders dominate the board. Typically, controlling shareholders appoint 70% of the directors.[55] Controlling shareholders also select management, which highly overlaps the board. This governance structure facilitates self-dealing transactions by enabling controlling shareholders to manipulate the shareholders, general meeting and the board at the expense of the interests of the corporation and minority shareholders.[56]
Since the major corporate governance problem of Chinese listed corporations resides with controlling shareholders, the establishment of the independent director institution primarily targets controlling shareholders, rather than management.[57] In the United States, management controls the board, while in China, the controlling shareholders control the board. So the establishment of the independent director institution in China aims to prevent controlling shareholders from exploiting their control to cause detriment to the corporation and its minority shareholders. The Opinion has made it clear that independent directors should conscientiously perform their duties according to relevant laws and regulations. The Opinion and the articles of incorporation protect the whole interests of the corporation, and give special attention to ensure that the legitimate rights and interests of medium-sized and small investors are not harmed.[58] #p#分页标题#e#
A less important role of independent directors in China is to monitor management integrity and performance. Despite the fact that controlling shareholders dominate the board, the problem with the divorce of management from shareholders still prevails in China.[59] One characteristic of Chinese corporate governance is that the controlling shareholders of most listed corporations are either state or state-owned enterprises.[60] It is impossible for the state to pay proper attention to the operations of such a large amount of state-owned enterprises. The officials delegated to run these corporations often take advantage of the vacuum of ownership in order to make dirty money.
Therefore, in China, independent directors primarily play two monitoring functions: (1) preventing controlling shareholders from taking advantage of their controlling position to do things detrimental to minority shareholders, and (2) bringing management under independent supervision to alleviate "insider" problems.[61] Xiangbin Yin, an independent director of a Chinese listed corporation, describes his experiences: the State-the largest shareholder-expects him to be a "KGB" in the corporation, i.e., to ensure the integrity of the executives, while the individual minority shareholders expect him to be a "white knight," i.e., to fight against the exploitation from the controlling shareholder and from insiders.[62] It is interesting that a state-owned enterprise based in Shenyang has appointed a deputy director of the Anti-Corruption Bureau of the District Prosecutor as its independent director.[63] It is said that the Anti-Corruption Bureau is an institution devised by the District Prosecutor to prevent job-related crimes and to oversee the operations in state-owned enterprises.[64] This solution may go a bit too far because candid board discussion would be strangled with a prosecutor sitting in the boardroom.
It seems that some Chinese listed corporations are confused by the monitoring roles of independent directors. Many listed corporations select technical experts as independent directors; one survey shows that about 42.6% of independent directors are technical experts.[65] These technical experts may play an important role in drafting and advising business strategy plans, but they are relatively weak in monitoring because many of them do not have knowledge or experience in business operations. #p#分页标题#e#
Independent and non-independent directors play different roles in the corporate governance structure. Any director will perform one of three different functions: executive, instrumental, and monitoring.[66] Executive directors may be managers or other insiders who can provide the board of directors with information concerning the business situation of a corporation. Instrumental directors may be a legal advisor, consultant, or financer, who is instrumental in the decision-making and operation of a corporation. Monitoring directors are outside directors who may be public directors or experts whose main task is to carry out independent supervision and examination of the performance of the corporation.[67]
In the United States, the central task of independent directors is to monitor inside directors and management.[68] Technical experts act as instrumental directors rather than monitoring directors.[69] Currently, the primary role of independent directors in China is to monitor the conflicts of interest in corporations. When selecting independent directors, these corporations should keep in mind the monitoring role of independent directors and choose directors who are familiar with the business operations. The possibility cannot be excluded that some controlling shareholders and insiders intentionally choose technical experts, who would naturally speak on technical issues rather than business matters. It is the job of the regulators to further elaborate the roles and requirements of independent directors.
The independent director institution has been in operation for several years in China. As of June 2003, 1244 of 1250 corporations listed in the two stock exchanges had independent directors on their boards.[70] Independent directors are now given more voice in corporate governance. For example, when two corporations listed in the Shenzhen Stock Exchange, Kelong and Nanhuaxi submitted their mid-term disclosures in 2002,[71] all of the independent directors chose to abstain when directors voted for the corporation,s financial reports.[72] In contrast, in August 2003, at the insistence of two of its independent directors, ST Nanhua-acorporation listed on the Shanghai Stock Exchange-successfully removed the chairman of the board, an unprecedented move.[73] The regulators have met resistance in enforcing the Opinion from China,s listed corporations, which has a notoriously opaque business culture.[74] Thirty-six per cent of listed corporations missed the deadline to fill at least a third of their board positions with independent irectors by June 2003.[75] Even the CSRC admitted that some of the listed corporations with independent directors withheld negative information from them, in some cases even refusing to invite them to board meetings.[76] #p#分页标题#e#
Because the independent director institution has functioned in China for only a relatively short amount of time, it is difficult to access its effectiveness on China,s corporate governance environment. Many problems exist even though many people favor this new institution. Yet, most independent directors do not, or cannot, fulfill their monitoring role in corporate governance due to the internal or external defects of the institution.
IV. CRITICISMS AND SUGGESTIONS
This Article criticizes the independent director institution on the following: (1) true "independence" for independent directors does not exist; (2) independent directors lack the information and skill required to effectively function; and (3) independent directors lack incentive to defy insiders and controlling shareholders.[77]
A. Independence
The independence of independent directors is not absolute and there is no universal test for independence.[78] The standards for independence vary with the legislative needs to regulate corporate governance structure.[79] For example, in the United States, where the major concern is independence from management, the NYSE
does not view significant stock ownership in itself as a bar to determining whether a director is "independent."[80] Contrast this to the Opinion in China, which requires that where the independent director institution targets controlling shareholders, an independent director shall not hold more than one percent of the shares and shall not be affiliated with any controlling shareholders.[81]
The apparent requirements on the independence of directors resolve only part of the potential conflict of interest. Since the purpose of the independent director institution is to safeguard the whole interests of the corporation, the selection of independent directors should be free from influence of controlling shareholders or management. Some critics argue that in the American system,"independence" exists only in theory because management maintains significant control over the selection of directors. As one scholar indicated, "no definition of independence yet offeredprecludes an independent director from being a social friend of, or a member of, the same clubs, associations, or charitable efforts as, the persons whose [performance] he is asked to assess."[82] Managers "can easily find directors who are neither subordinates, relatives, nor suppliers, who will support almost anything that the executives propose, and who will resign in extreme cases rather than oppose the executives who have invited them to the board."[83] #p#分页标题#e#
Moreover, since studies show that the majority of outside directors are themselves chief executive officers (CEOs), these "directors are unlikely to monitor others more energetically than they believe they should be monitored by their own boards."[84] While independent nominating committees have been introduced to ensure the independence of the director selection process, their effectiveness has been criticized.[85] The committee normally solicits suggestions from the CEO as to potential candidates. Nominating committees "may make the CEO work harder, but over time he gets the board he wants."[86]
In China, besides management, independence means independence from controlling shareholders.[87] In a country where the relationship-known as guanxi, in both social and business circles-is strongly emphasized, it is difficult for the selection process of independent directors to avoid influence by controlling shareholders or management. Although the Opinion provides strict requirements for independence, true independence of directors is difficult to achieve. There is no independent nomination committee in listed corporations. Neither cumulative voting nor withdrawal mechanisms have been adopted by Chinese listed corporations. Article 4 of the Opinion provides that independent directors are to be nominated by the incumbent board of directors, the board of supervisors, or the shareholders jointly or individually owning a one percent equity interest.[88] In reality, independent directors are solely selected by controlling shareholders, either by themselves or through the board.[89] Controlling shareholders and management try to select those with some connection to them and who will side with them.[90] The CSRC admitted that: "Many corporations, independent directors were nominated by major shareholders or management. Such a mechanism cannot guarantee the independence of the appointees."[91] Each year, the CSRC rejects some appointments of independent directors because of various "under the table" connections with controlling shareholders or management.[92] Last year, an entertainment corporation based in Xl,An selected a famous TV producer as its independent director.[93] When he was questioned about his qualifications to be a director, the TV producer frankly declared: "The manager is my good friend!" [94] #p#分页标题#e#
To ensure true independence, the focus of regulation should be on the procedure of selection and election of independent directors. An independent nomination committee consisting of entirely independent directors is in a better position, for the sake of minority shareholders, to nominate candidates of independent directors. To make the selection of independent directors free from the influence of controlling shareholders, controlling shareholders should not be allowed to nominate independent directors, nor should they be allowed to vote for the independent director candidates they nominated. In electing independent directors, cumulative voting and withdrawal institutions could also be adopted. After independent directors are elected onto the board, constant monitoring is necessary. Regulatory institutions such as the CSRS and the stock exchanges are effective but are short of resources to monitor every listed corporate board. A private cause of action may be given to shareholders, particularly minority shareholders, to challenge the independence of incumbent directors. Because independent directors represent minority shareholders, interests, it is logical to give minority shareholders the right to remove those independent directors whom they no longer trust.
B. Incentive
The more independent a director is, the fewer incentives exist for that director to maximize shareholder interest, and vice versa, more incentive equals less independence.[95] This "Catch-22" points out an inherent dilemma of the independent director institution.
In the United States, critics claim that independent directors lack adequate incentive for maximizing shareholder interests.[96] It is well accepted that independent directors should be those who do not derive the majority of their income from the corporation.[97] Without financial gain, the only incentive for independent directors to act is their professional reputation. But they can always protect themselves by resigning from the board and claiming innocence, due to management,s withholding of information. Who remembers the names of those sitting as independent directors on the boards of Enron and Worldcom? And how many of them are blamed for their failure to take action? Moreover, the potential liability in relation to the benefits of independent directors is too disproportionate for directors to be anything but risk averse. Therefore, even where a director is truly independent, active, and informed regarding corporate affairs, prudent judgment often dictates that the director follow the course of action endorsed by management. Incentives to veto the management strategy rarely exist. One study suggests that "rather than manage, boards react; they render advice when solicited and replace the CEO only amid dire emergencies."[98] #p#分页标题#e#
In China, there is a striking range in the level of independent director compensation; the average annual pay ranges from 1,000 RMB (about 121 USD) to more than 80,000 RMB (about 9,674 USD).[99] Most independent directors earn between 40,000 RMB (about 4,838 USD) and 50,000 RMB (about 6,046 USD) a year.[100] While some independent directors are volunteers without any compensation, Zhenbaiwen-a corporation listed in the Shanghai Stock Exchange-pays its independent directors a base compensation of 120,000 RMB (about 14,510 USD) per year plus additional compensation for each board meeting they attend in that year.[101] Candidates for independent directors are sure to think about economic incentives, in addition to professional ethics, in weighing whether or not it is worth being an independent director and in how they will perform their duties. If the compensation is too low, independent directors lack economic incentives. If the compensation is too high, the independence is eroded. The Opinion prohibits a person from sitting as an independent director on more than five listed corporate boards. Besides ensuring that independent directors have enough time and energy, this prohibition also prevents people from becoming "professional independent directors," whose income may come primarily from one or more listed corporations.
The flip side of compensation is liability. Establishing a liability institution may, to a certain extent, discourage independent directors from acting as "ornamental vases" and make them truly fulfill their due roles. Liability, however, is a double-edged sword. If the liability imposed on them is too high, independent directors will tend to be conservative in executing their responsibilities. For example, an independent director might strike down all conflict of interest transactions to avoid risk. Many people would be deterred from pursuing independent director positions, and this would result in difficulty finding appropriate candidates. Listing companies would in turn have to pay more for suitable candidates. In 2002, Jiahao Lu, an independent director of Zhengbaiwen, was fined 100,000 RMB (about 12,091 USD) by the CSRC because he failed to take any action when the corporation submitted a false accounting report.[102] Lu subsequently sued the CSRC for this decision, but the No. 1 Intermediate People,s Court of Beijing dismissed the lawsuit.[103] Lu was the first independent director punished in China. He is a retired professor with a monthly income of only 1,500 RMB (about 181 USD). Lu had received no compensation from Zhenbaiwen as its independent director.[104] Right after this incident, at least sixty-six independent directors resigned from listed corporations.[105] Zhengbaiwen is now paying over 14,000 USD to its independent directors, much more than other listed corporations do. To avoid this result, an entirely independent compensation committee should be established under the board to decide the compensation of both directors and management. It does not make sense for controlling shareholders and management to decide the compensation of the very independent directors who monitor their performance. In terms of the compensation method, equity compensation such as restricted stock and stock options is more appropriate for independent director compensation than cash.[106] Stock ownership may align independent directors with shareholder interests and promote an incentive to monitor.[107] In China, independent directors are designed to protect minority shareholder interests.[108] Equity ownership would put independent directors in the shoes of the minority shareholder, which would give them a "shareholder orientation" and "a genuine interest, in the corporation.[109] #p#分页标题#e#
The regulators should expand the scope of independent director liability. Under the current Corporation Law of 1993, it is unclear how much duty of care a director owes.[110] In the Lu case, the CSRC fined Lu based upon the Shares Issuance and Exchange Regulation Ordinance (for Trial Implementation), an administrative regulation. The ordinance was published in 1993 and a large part of it was superseded by the Securities Law of 1997.[111] It is disputed whether the CSRC had jurisdiction over Lu and whether the CSRC had power to impose such a big fine.[112] China,s regulators should explicitly provide for independent director liability in the corporation or securities laws. They should also distinguish independent director and non-independent director liabilities.
C. Ability
In the United States, many independent directors are no match for insiders in terms of knowledge and purpose of the corporation. Also, due to limitations of time and information, it is very difficult for independent directors to monitor corporate operations. Management has a virtual monopoly on information and selectively reveals information to independent directors. It is common for an independent board to be the last to know about any corporate difficulties. Agenda control by inside directors, coupled with lack of time or expertise by independent directors, adds up to the worst possible mix for frank discussions on the board or decision-making as a board.[113] These outsiders know little about the actual business situation of their corporations and end up observing problems from the perspective of management. Independent directors cannot solve the problem of asymmetrical information.
Certain boardroom norms exacerbate this disparity. For example, "[independent] directors usually do not contact fellow [independent] directors outside meetings, whereas inside directors and the CEO are in constant communications with one another.[114]" Consequently, "the chances of a majority of [independent] directors acting together to oppose any management initiative or even convey criticism are slim."[115] One commentator finds that, "[s]ocial psychologists and management experts would dub these meetings as very poor decision-making forums. The purpose of a group discussion of an issue is to discuss diverse points of view openly, and to confront and resolve differences of opinions."[116] As Warren E. Buffett said, despite "the lapdog behavior" of independent directors, they are not bad people but the boardroom atmosphere "sedates their fiduciary genes."[117] #p#分页标题#e#
In China, a large number of independent directors are professors and scholars from universities.[118] The problem here is two-fold. First, these academics lack time as they concurrently hold other full-time positions. Second, they do not necessarily possess the knowledge and experience of a business operation. Many of them are excellent in their respective fields but are not familiar with the operations of listed corporations and do not know how to act as a director.[119] However successful the independent director may be in his own field, it is doubtful whether the independent director has the ability to challenge another equally successful person in an entirely different field. Would a university president be competent to monitor the management of a vertically integrated natural resources corporation? This doubt cannot be dispelled. On questions of probity, if auditors are nervous about their ability to detect fraud when they have full access to the corporate books, how can an independent director be expected to detect dishonesty hidden in the neat and professionally turned-out documents presented to him for board meetings?
Because China,s modern corporate institution is so young, it lacks experienced and qualified experts in business operations. The CSRC has already begun to cooperate with institutions of higher learning in offering training courses to independent directors, indicating a trend towards allowing only those who have received training to fill the posts of independent directors. This might be a feasible way to improve the qualifications problem of independent directors although the effectiveness of these short-term training courses is limited. Since 2001, more than 1000 listed corporations, unlisted public corporations, and fund managers have been competing for approximately 10,000 graduates from thirty training courses to serve as independent directors.[120] But not all graduates have met other requirements for becoming an independent director.[121]
Even assuming sufficient time and skills, independent directors find it very hard to play their role in a board controlled by a single dominating shareholder. The Opinion only requires that one third of the board members be independent directors.[122] Insiders still dominate the other two thirds of the board seats. In the United States, where outside directors prevail over inside directors in number, insiders can still influence the board through a variety of means.[123] How can we expect two or three independent directors, a minority on the board, to fight against insiders? The ratio of independent directors on the board is still too low. The CSRC should require each listed corporation to have a majority of independent directors. Entirely independent committees, such as compensation and audit committees, should also be established under the board. These independent directors will find it easier to express dissenting opinions without the presence of controlling shareholders and insiders whom they are supposed to monitor. Additionally, such independent directors, as members of a special committee, can develop a solid base of knowledge by studying specialized topics. #p#分页标题#e#
In summary, although the independent director institution is politically correct, the nexus between directors and managers is burdened with personal and financial entanglements. It is difficult for independent directors to be effective monitors of management. Director independence is a method for promoting good corporate governance, but it does not ensure the most effective result. Regardless, the independent director institution is a major step towards improving the corporate governance structure in China. It is unrealistic to expect independent directors to completely prevent control by controlling shareholders and insiders when listed corporations have not yet solved problems in their own share structures, and China has yet to formulate a sound legal institution.


【Exprss】
[48]Lu,supra note 9.
[49]Id.
[50]See id.
[51]See Liu dongkai, Capital Market Reform Touches Hard Core of Chiana’s Economic System,XINHUA NEWS AGENCY,Feb.3,2004,available at2004WL68250769.
[52]See Linan Yan, Corporate Governance Under Chinese Law: Problems and Prospects, 7 HARV.ASIA Q. (2003), available at http://www.fas.harvard.edu/.~asiactr/ haq/200302/index.htm.
[53]See Huang, supra note 15.
[54]Id.
[55]See id.
[56]For example, one listed corporation purchased from an affiliated corporation of the controlling shareholder more raw materials than what it could use for the next several hundred years. Schipani & Liu, supra note 14, at 47.
[57]See Gu, supra note 1, at 60.
[58] See id. at 71.
[59] See id. at 60.
[60]See id.
[61] Huang, supra note 15.
[62]Yian Deng, Du Li Dong Shi Bi Pin Du Li Jian Shi [Independent Directors Compete with Independent Directors], FIN. & ECON. TIMES, available at http://business.sohu.com/60/29/article200442960.shtml (Mar. 29, 2002).
[63]Huang, supra note 15.
[64] Id.
[65]Lu, supra note 9.
[66]See Gu, supra note 1, at 61-62.
[67]Lu, supra note 9.
[68]See Ho, supra note 10, at 514-15; PRINCIPLES, supra note 29, at ~ 3A.01. See generally Brudney, supra note 5 (arguing for the importance of regulatory controls in corporate governance in view of the inadequacy of independent directors.); see generally James D. Cox. Managing and Monitoring Conflicts of Interest.' Empowering the Outside Directors with Independent Counsels, 48 VILt,. L. REV. 1077, 1082 (2003). #p#分页标题#e#
[69]See Gu. supra note 1, at 61.
[70]Jian Lin, Zheng Jian Hui You Guan Fu Ze Ren Ti Chu Yi Si Da Cuo Shi Wan Shan Du Dong Zhi Dtt [Head of CSRC Raises Four Issues to Improve the Independent Director Institution], SHANGHAI SECURITIES DAILY (Feb. 6, 2004), at http://finance.sina.com.cn/y/20040206/0722619309.shtmt.
[71]Yongli Sun, Du Li Dong Shi Zai Fa Yan [Independent Directors Are Raising Voices], NEGOTIABLE SECURITIES TIMES (Jul. 5, 2002), at http://business.sohu.com /07/87/article202008707.shtml.
[72]Id.; see also Lei Wang, ST Nan Hua Du Dong Ban Dao Dong Shi Zhang [ST Nanhua's Independent Directors Drove Away Chairman of Board], SECURITIES TIMES (Aug. 22, 2003). Available at
http://www.p5w.net/p5w/home/stime/today/200308220248.html.
[73]Wang, supra note 72.
[74]Bei Hu, Independents Shunned by China Firms, S. CHINA MORN. POST, Feb. 7.2004, available at 2004 WL 55518220.
[75]See id.
[76] Id.
[77]See generally Brudney, supra note 5.
[78]Id. at 599.
[79]Id. at 645.
[80]See generally NYSE CORPORATE GOVERNANCE RULES ~ 303A, available at http://www.nyse.com/pdfs/finalcorpgovrules.pdf (last visited Jul. 25, 2005). It is interesting that Nasdaq tightened the criteria of independence by excluding large shareholders in 2002. Press Release, Nasdaq Takes New Actions on Corporate Governance Reforms (July 25, 2002), at http://www.nasdaq.com/newsroom/news/2002.stm.
[81]Gu, supra note 1, at 64.
[82] Ho, supra note 10.
[83] OLSON, supra note 7, at § 2:26.
[84]Laura Lin, The Effectiveness of Outside Directors as a Corporate Governance Mechanism: Theories and Evidence, 90 NW. U. L. REV. 898, 915 (1996).
[85] Ho, supra note 10, at 519.
[86] Id.
[87] Id.
[88]Guo, supra note 28, at 71.
[89]Ho, supra note 10, at 520.
[90]Lu, supra note 9.
[91]Hu, supra note 74.
[92]Ocean Net, Zhang Ji Zhong Jia Ping Wa Yao Ke Chuan Mou Gong Si Du Li Dong Shi [Jizhong Zhang and Pingwa Jia Will Be Independent Directors of a Corporation] (May 13, 2003), available at http://cn.ent.yahoo.com/030513/127/1 lx6q.html. #p#分页标题#e#
[93]Id.
[94]Id.
[95]Ho,supra note10,at 512.
[96]Lu,supra note 9.
[97]See generally Gu,supra note1.
[98]OLSON, supra note 7, at$ 2:26.
[99]Lu, supra note 9.
[100] Id.
[101]Yongqiang Yi, PT Zheng Bai Wen (600898): Du Li Dong Shi Chou Xin Qi Zheng Yi [PT Zhengbaiwen: The Independent Directors' Cott~pensation Is Controversial], NEGOTIABLE SECURITIES TIMES (June 25, 2002), available at http://business.sohu.com/ 72/52/article201845272.shtml.
[102]Gu, snpra note 1, at 70-71; see also Lu, supra note 9.
[103]Zheng Bai Wen Yuan Dong Shi Zhuang Gao Zheng Jian Hui - Fa Yuan Bo Hui Lu .lia Hao Su Zhuang [The Court Dismissed Jiahao Lu's Suit], LANZHOU MORNING PAPER (Aug. 13, 2002), available at http://www.gansudaily.com.cn/20020813/501/ 2002813A00502014.htm.
[104]Zheng Bai Wen Yuan Dong Shi Lu Jia Hao Bu Fu Zheng Jian Hui Chu Fa An Kai 7ting [The Hearing Is HeM Today Where the Ex-director Jiahao Lu Sues ttle CSRC],(June20,2002),available at http://www.chinanews.com.cn/2002-06-20/26/196639.html.
[105] Chen Wen fang, Shang Ban Nian Dtt Li Dong Shi Li Zhi 37 Ren Dtt Li Dong Shi Bit Hao Dang Le [Thirty-Seven Independent Directors Leave Post in First HaOCo[ Year—lt Is Not Easy to Be an Independent Director], NEGOTIABLE SECURITIES ]'IMES, at http://www.szs.com.cn/200208/ca159075.htm (last visited Jul. 25, 2005); The Hearing ls Held Today Where the Ex-director Jiahao Lu Sues the CSRC (June 20, 2002), at http://www.chinanews.com.cn/2002-06-20/26/196639.html.
[106]See Charles M. Elson & Christopher J. Gyves, The Enron Failure and Corporate Governance Reform, 38 WAKE FOREST L. REV. 855,870 (2003).
[107]Id. at 869-71.
[108] Gu, supra note 1, at 70.
[109]See Letter from Warren E. Buffett, Chairman of the Board, to the Shareholders of Berkshire Hat haway Inc. 10 (Feb. 27, 2004), available at http://www.berkshirehathaway.com/letters/20031tr,pdf.
[110]See Gu, supra note 1, at 64-68.
[111] See id. at n.16.
[112] Id. at 70-71. #p#分页标题#e#
[113] Ho, supra note 10, at 512.
[114] Id. at 512.
[115]Id.
[116] Id. at 513.
[117]See Letter from Warren E. Buffett to the Shareholders, supra note 109, at 8.
[118]According to the CSRC. about 42% of independent directors of listed corporations are academics. Hu, supra note 74.
[119]See id.
[120]Id.
[121]Id.
[122]Id.
[123]Lu,supra note9.