Impact of Foreign Directors on Board Meeting Frequency

Hahn, P. & Lasfer, M. (2016). Impact of Foreign Directors on Board Meeting Frequency. International Review of Financial Analysis, 46, pp. 295-308. doi: 10.1016/j.irfa.2015.11.004

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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 meetings frequency and the presence of foreign non-executive directors is correlated with lower total shareholder returns and increases the agency conflicts through excess compensations 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 exacerbates significantly the agency conflicts.

Item Type: Article
Additional Information: © 2016 Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Uncontrolled Keywords: Agency conflicts; Board meetings; Compensation; Non-executive directors; Foreign directors.
Subjects: H Social Sciences > HF Commerce
Divisions: Cass Business School
URI: http://openaccess.city.ac.uk/id/eprint/12925

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