Seniority, CEO tenure, and independent directors’ dissenting behaviors
(2.Xiamen National Accounting Institute 361005)
【Abstract】Confucianism is an inseparable part of Chinese traditional culture and seniority is an important component of Confucianism, which still affects individual behavior in the Chinese society subtly. Using manual data on seniority and based on the opinions of independent directors on board meetings that is unique in the Chinese stock market, this study examines the influence of seniority on independent directors’ dissenting opinions. The findings on the basis of 13,336 annual observations from the Chinese stock market from 2005 to 2013 show that seniority is significant and negatively associated with the likelihood and the number of dissenting opinions of independent directors, suggesting that seniority restrains independent directors’ dissenting opinions. In addition, the longer the CEO tenure, the more obvious the negative effect of seniority on the dissenting opinions of the independent directors, implying that the effect of seniority on independent directors’ dissenting opinions depends on the power of the CEO. This paper is the first one to measure seniority on the basis of an analysis of the ranking among independent directors in the board of directors and judge whether seniority culture exists in specific listed companies. This method will contribute to the existing literature on questionnaire survey in management. Moreover, this paper finds that the seniority in Confucianism will be detrimental to the supervising function of the independent director, which reveals the negative aspect of the Confucianism and at the same time provides practical implications for organizational culture cultivation in enterprises.
【Keywords】 seniority; organizational culture; independent directors; dissenting opinions;
. ① It does not regard “others”as dissenting opinions here, because independent directors often express their agreement to the discussed proposal by this way and they just add suggestions based on it. [^Back]
. ② “Listing early comers first” is a common practice, so this paper excludes “tenure” from the indicators of seniority. Ranking independent directors’ names according to their arrivals is not an indicator that they are assigned to different levels. Ranking them in reference to the “tenure”is mainly reflected in the fact that those reappointed is put ahead of the newcomers. The reappointment of the independent director shows that the company recognizes their abilities in a sense. [^Back]
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