Taming Majority Shareholders in Listed Companies:
Different Questions but the Same Answer?
 The independent director system comes from the US, where it has been used to limit self-dealing by management. The prevalence of state owned enterprises and a weak judicial system in China drove the Chinese Securities Regulatory Commission (CSRC) to attempt to use the independent director system to address a different problem: the looting behavior of majority shareholders. However, China’s distinct economic and political background has made some aspects of the independent director system in China different from its origins in the US.
How does this transplanted system work in China? By reviewing the Chinese independent director system in practice, this paper tries to determine whether Chinese corporate governance will converge on the US model. The mere existence of an independent director system in China is not necessarily evidence of corporate governance convergence, as the system functions differently in both countries.
The Corporate Governance in East Asia 2007 Conference papers were published on the Asian-Pacific Law & Policy Journal, Volume IX, Issue 1.
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