The relationship between director compensation and board independence: Evidence from China

Using a sample from Chinese Stock Exchange, we examined empirically the relations between director compensation and board-of-director independence, and the relationship between director compensation, board-of-director independence and corporate performance. Our evidence suggests that Iona-tenure CEO, CEO being also chairman of the board, higher proportion of inside directors in board and larger board size could lead to monitoring impediments of Chinese listed company. Our results imply that the economic benefits of the shareholder can be protected better when the board of directors keeps its independence.