Impact of foreign directors on board meeting frequency

Peter D. Hahn and Meziane Lasfer

International Review of Financial Analysis, 2016, vol. 46, issue C, 295-308

Abstract: We find that UK firms are increasingly having fewer board meetings mainly because of the significant increase in the proportion of foreign non-executive directors on the board. The combination of low meeting frequency and the presence of foreign non-executive directors is correlated with lower total shareholder returns and increases the agency conflicts through excess compensation of the CEO and chairman, which are not related to firm value creation. Our results suggest that a trade-off between increased board diversity coupled with reduced monitoring through fewer meetings, weakens the internal governance mechanism, reduces the advisory role benefits of foreign non-executive directors who are likely to possess international expertise, and significantly exacerbate agency conflicts.

Keywords: Agency conflicts; Board meetings; Compensation; Non-executive directors; Foreign directors (search for similar items in EconPapers)
JEL-codes: G3 G30 G38 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:46:y:2016:i:c:p:295-308

DOI: 10.1016/j.irfa.2015.11.004

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