| Summary: | 碩士 === 國立交通大學 === 管理學院經營管理學程 === 105 === Independent directors play an important role in board monitoring and been seen as a mechanism for reducing the probability of illegal action and the problems arising from the separation of ownership and management. However, the recent scandals show that these companies face enormous crisis because their independent directors failed to perform the duty of monitoring. There might be some problems with the mechanism of the independent directors in Taiwan, and therefore we try to review it.
This paper empirically examines the relation among the board independence, the tenure of independent directors, and firm performance in Taiwan. The result is consistent with the Agency Theory that the inclusion of higher percentages of independent directors on the board can enhance firm financial performance. Meanwhile, the empirical finding indicates that independent directors with longer tenure would have more relevant strategic knowledge, industrial experience and professional perspective, so that they have positive influence on corporate financial performance. On the other hand, the empirical result shows that the tenure of independent directors has negative effects on corporate market performance, indicating that the investors tend to believe that the independent directors with long tenure are more likely to get too close to the management and become less independent over time.
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