On Independent Director's Resignation Behavior and Values of Listed Companies—Analysis on Independent Directors' Exodus Caused by "Kangmei Pharmaceutical Case"

Abstract

The independent director system plays a vital role in corporate governance. Under the background of independent directors' exodus caused by "Kangmei Pharmaceutical Case", Shanghai and Shenzhen A-share listed companies from December 31, 2021 to March 31, 2023 are chosen as the samples in this paper, in order to explore the possible influences of independent director's resignation behavior on the values of listed companies. It has been found that listed companies with independent directors having resigned are less capable of creating values, compared with those whose independent directors are in office, which proves that the independent directors' resignation behavior in listed companies negatively affects corporate values. It further proves that if listed companies manage to improve internal control quality and guarantee independent directors fully exercise power to lower the possibility of independent directors' resignation, these companies will create higher values.