Relations between the professional backgrounds of independent directors in state-owned enterprises and corporate performance

The article analyzes how the professional backgrounds of independent directors (hereinafter IDs) in state-owned enterprises (hereinafter SOEs) influence corporate performance by collecting and analyzing publicly available data on listed companies. After differentiating between the “nominal professional backgrounds” and “real professional backgrounds” of IDs, we find that more than 85% of IDs have backgrounds in “the party-state system”. Based on IDs' “real professional backgrounds”, IDs' proportion of board seats is negatively correlated with corporate performance, indicating that IDs from “the party-state system” background did not play a positive and effective role in helping companies improve their corporate performance. Additional deep, broad analysis shows that the diversification of IDs' backgrounds in SOEs is positively correlated with corporate performance. Additionally, an SOE that has dissenting IDs or IDs with “different voices” achieves better corporate performance. Therefore, reducing the number of IDs from “the party-state system” and focusing more on IDs' professionalism and background diversity should be considered.