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《China Industrial Economy》 2002-02
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Obtaining Inside Information,Efficiency Trade-off and Enhancing Function of Directorate:A Hypothesis of the Role of IND and Its Application

CHEN Hong-hui, JIA Sheng-hua (Management School of Zhejiang University, Hangzhou 310027, China)  
The emergency of IND (independent non-executive director) resulted from the development of theories and practices of modern corporate governance. It is identified that the ability of obtaining inside information by INDs is the main element influencing corporate governance efficiency. With the enhancement of the independence of board of directors, the fairness of the decision made by the board of directors will increase , but the applicability of the decision will decrease. Under the effect of efficiency trade-off, it is posed that there is no liner relationship between corporate governance efficiency and the proportion of INDs on board of directors and thus better explains the various arguments on the relationship between them. On this basis , there also designs a basic framework of exploring how to establish the IND system in China considering factors such as the proportion of INDs on boards of directors, the qualification of INDs, the method of choosing INDs and incentives and restriction to INDs.
【CateGory Index】: F272.9
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