[Abstract] board members can directly affect the company's investment and financing and operational decision-making by the board of directors. So there are different backgrounds and preferences of the members of the board of directors made the decision will be different. This paper discusses the influence of the members of the Board of Directors of the feature proxy conflict, whether through analysis of diverse characteristics of board members to reduce the role of proxy conflict.
Paper Keywords: Characteristics of the Board; female directors; corporate governance; agency conflict
Board members of the shareholders, the company's business development play a crucial role. Different risk preferences, moral consciousness, attention will lead to a different decision-making perspective. From a single individual, the decision-making process may vary, but if they can find some law of induction. It is characterized by the Board for such a classification, the Board has different characteristics have different decisions. Board Characteristic features include the features and board member of the board structure. Literature more common structural features of the board include board size, board composition, the proportion of shareholding of directors, the annual number of board meetings, directors' remuneration, chairman and general manager whether two jobs - one, the proportion of independent directors, etc; features include board members Board members gender, age, tenure, professional experience, education level and so on. Discussion of the existing literature on the structural features of the board are more abundant, and for board members to discuss individual characteristics than less. What if the individual characteristics of board members can influence his decision, and this decision and whether it will affect the entire company, this article focuses on this aspect.
In recent years, many countries have proportions of women directors in the board made mandatory. For example, Norwegian law requires that the proportion of women directors of state-owned listed companies must be more than 30%, while Spain and Sweden requires that the proportion of women directors of each listed company to 40%, 25%. Women Directors 'speed play,' and efforts to promote the one hand due to the feminist movement, on the other hand it may be derived from theoretical and empirical evidence to support the world. Among them, many studies have confirmed that female directors on corporate performance and corporate governance has a positive effect. These studies generally based on the idea: board members lack the heterogeneity of the company's development will be adverse, and diverse gender, age, educational background and other demographic characteristics would help the company's healthy and sustainable development. When board members personality traits, risk preferences, moral consciousness, differences concern perspective, the company's development strategy and corporate governance idea would be broadened enough to consider the issue more fully, in order to improve governance efficiency.
The current 'Company Law' Article 47 of the Board of Directors of the shareholders' meeting shall exercise the following powers: 1, to convene a shareholders' meeting to shareholders reporting; 2, the implementation of the resolutions of the shareholders' meeting; 3, the company's business decisions plans and investment programs; 4, the development of the company's annual financial budget and final accounts; 5, developing the company's profit distribution plans and loss recovery plans; 6, to develop the company increase or decrease of registered capital and the issuance of corporate bonds; 7, designated merger, division, dissolution or change in corporate form of programs; 8, decided to set up internal management mechanism; 9, decided to appoint or dismiss managers and their remuneration, and decided to appoint a manager in accordance with the nomination or dismissal of deputy managers and financial leaders and remuneration; 10 primary school education essay papers, formulate the basic management system of the company; 11, the articles of association of the other powers. The impact on the company's board members fateful, so whether board members have different preferences will affect corporate governance, has become a question worth exploring.
Second, the literature review
Aleri (2001) selected from 1980 to 1998 the US Fortune 500 companies in 215 as a sample, assets, sales income and shareholders' equity three indicators to measure corporate performance. The study found that compared to the general company, a relatively high proportion of women in the board of directors of the company in sales revenues and shareholder returns 1.6% and 10.7%, respectively. James and other big companies of the United States 112 survey found that in 2003, the proportion of female members of the board of the investment rate of return, total return on assets have a significant positive impact. James and other big companies of the United States 112 survey found that in 2003, the proportion of female members of the board of the investment rate of return, total return on assets have a significant positive impact. Catalyst survey in 2007 showed that the level of Fortune 500 companies list sorted proportion of women directors, the top 25% of the company than the return on equity of 25% after the company's return on sales and return on capital is 53% higher, respectively, 42 % and 66%; the board has at least three or more female directors than the company average net assets income rate of 16.7%, 16.8% high return on sales, return on capital rate of 10%. Ross (2007) to 1,500 US companies from 1992 to 2006, data were analyzed to Tobin's Q to measure corporate performance, found that female executives have a positive impact on corporate performance, they can improve corporate performance.
Third, the characteristics of board members and agency conflict
The so-called corporate governance means, including through a formal or informal, internal or external stakeholders or institutional mechanism for coordinating the company and all stakeholders to ensure that the scientific and corporate decision-making, and ultimately maintain all aspects of the company a system benefit arrangement. In short, corporate governance is the company's stakeholders through a series of internal and external mechanisms of shared governance mechanisms. The case of asymmetric information, internal and external information related to the company's interests were acquired different understanding of the company's profitability will be different in the separation of ownership and control of modern enterprises, there will be a proxy conflict issues . Currently, there are three types of proxy conflict issues, namely: agency conflict agency conflict between managers and shareholders, agency conflicts between shareholders and creditors, the large shareholders and minority shareholders.
Agency conflict (a) managers and shareholders. Agency conflict between managers and outside shareholders by proxy is the first issue of concern. With the company's production and development, the company's shareholders is not the actual owner of the direct management of the company, monitoring costs for individual shareholders is very high, which makes the 'free rider' widespread. Controlling shareholder because of poor oversight and weakened the separation of ownership and control, so that the level of effort of managers difficult to observe directly, the same neglect and waste of directors is also difficult to observe directly. Directors have an incentive to deviate from the interests of shareholders whether to take action, the answer is yes, because the utility functions of shareholders and directors are not consistent, the business may harm the interests of shareholders to make a behavior, such as the directors may make use of investor funds Get extra allowance, excess compensation paid to harm the interests of outside investors investment decisions and business decisions.
Accounting board of shareholders, executive directors, independent directors will affect the agency conflict between managers and outside shareholders, board members of the same individual characteristics also affect their decisions, thus affecting the agency problem. From the viewpoint of economic man hypothesis, the directors if we can get more money by other means, they will choose to harm the interests of shareholders. But different people of different risk preferences, this time the individual characteristics of the board members will make their choice of small gains but more security. For example, the income obtained by paying the excess return will be greater than normal income, but this will be detrimental to the interests of shareholders, starting from the assumption of economic man, a member of the board of directors will choose to pay the excess return, but if you take into account the risks, such as once they are found to pay unreasonable will likely be dismissed, then the choice of board members becomes very interesting, risk appetite may choose to excess returns, and risk averse choose regular income, once more the reputation of the person being expelled by the reputation of the impact of the inevitable will be greater than those nobodies, therefore, not well-known people may tend to choose excess returns, but there are more people in order to maintain the reputation of their own reputation, will choose regular income. So, based on this because of personal characteristics and make different choices to a certain extent can reduce the agency conflict.
(B) the shareholders and creditors of proxy conflict. Creditors in selecting investment projects focus on more security, less appetite for risk, stable income projects. Because high-yield bond creditors charge only specified interest, high-risk projects will not bring revenue creditors; on the contrary, the creditors have to bear more risk, so the creditor in project selection small appetite for risk, stable return project. However, it is the shareholders additional revenue gainers, preference shareholders so high risk, high return projects. Shareholders for the selection of board members play a decisive role, that of shareholders to control the company's business decision-making through the appointment of board members, board members mainly on account of the preferences and interests of the shareholders. The decision conflicts between shareholders and creditors for different risk preferences generated by the board of directors of the show. However, whether the board members are the same appetite for risk it, obviously there are individual differences led to the preferences of the same is impossible. Women than men, prefer stable and low-risk projects, different ages will have some impact, with respect to the elderly, the young prefer high-risk, high-yield projects. So, if women board members accounted for a higher proportion of elderly or higher, will reduce the agency conflict between shareholders and creditors of it, this may be our market data for further study.
Agency conflict (iii) large shareholders and minority shareholders. Since shareholders can not directly manage the company, so as the election of board members to the company's manager, responsible for the general meeting of shareholders. However, there are also large shareholders and minority shareholders of the points, due to the large shareholders have more voting rights for the selected board members may also play a greater role. So, the major shareholder is bound to represent their own interests tend to select board members. There is a conflict between major shareholders and corporate management thesis minority shareholders, large shareholders often using covert tunneling mode transfer and misappropriation of company assets, depriving the interests of minority shareholders, such as the controlling shareholder of the company's assets will be sold at low prices to their owners Other company, or pay their own higher pay, or to their other companies to provide debt guarantees, insider trading. Emerging markets in Asia, the current equity firm focused very common, so the agency conflict between major shareholders and minority shareholders would behave more severe at small investors to protect the environment is weak, the agent will show major shareholder conflict deprivation of minority shareholders. However, major shareholders can be denied on the premise that the interests of small shareholders, major shareholders for the company has a decisive role in the decision-making, for example, if a shareholder wants to sell the company's assets cheap, it must be in accordance with the provisions of the articles of association, the board members can agree, Assuming that this shareholder is a board member, then he needs to persuade the other members agree, then, the individual characteristics of members of the Board might affect his decision. For example, women may be more cautious directors reluctant to participate in collusion, or older members may be more concerned about their reputation and thus reject conspiracy. From this perspective, diversification of board members, can reduce the agency conflict of large shareholders and small shareholders. Earlier literature research focused on the structure of the board of directors level, and study the characteristics of the board members themselves less. Research in this area can be a combination of behavioral economics, the use of market data, more in-depth study.
Since the board of directors for the company's development plays a vital role, how to make more effective decision-making board of directors and the right is very worthy of study and discussion. This paper will focus research board is transferred to an individual, by analyzing the characteristics of the members of the Board of Directors, that the Board of Directors diverse membership could reduce the error rate decision, balancing the interests of all sides, and that the structure can be diversified board member reduce agency conflicts and improve the effectiveness of corporate decision-making.
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