The Analyses of Independent Directors' Governance Effects Based on the View of Double Principal-agent

The paper studies the governance effect of independent directors based on the theory of double principal-agent.It shows that increasing the proportion of independent directors to board of direcrors in order to monitor the CEO make CEO share insider information with board of directors reluctantly,thus independent directors is hard to reduce agency cost between shareholders and managers directly.On the other hand,although the independence of independent directors must be reinforced in order to curb large shareholder and provide better protection to small shareholders,it impairs governance effectiveness of large shareholder.As a result,sharp benefit conflicts between shareholders and managers arise,and ultimately decrease the whole shareholders profits indirectly.Overall,in addition to facilitating understanding independent directors' governance effect deeply when double principal-agent problem occurs,our results provide the theoretical basis for constructing the corporate governance structure with Chinese characteristics.