Compensation for Independent Director of the Board and Firm Performance: An Empirical Analysis on Listed SMEs in China

The independent director system has been prevailing for a long time in western developed countries, and theoretical independent director that is not associated with the interior company can to monitor the company's development preferably. However, there have not been specific findings in specific empirical analysis. Since China introduced independent director system to the listed companies in 2001, how to bring in foreign policy preferably is a research highlight nowadays. Researching on SME board listed companies in China; the paper mainly investigated the independent directors' response to the change of the independent director compensation in the SME board listed companies. Consequently the relationship of them has been discovered and path dependency theory mentioned by North in institutional change theory has been innovatively introduced. The viewpoint that "as to the enhanced encourage brought by the independent director compensation, more attention should be paid to the relative change rather than the absolute change" has been put forward, which has brought a new perspective for corporate governance in China after the introduction of independent director system.