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Impact of foreign directors on board meeting frequency

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  • Hahn, Peter D.
  • Lasfer, Meziane

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.

Suggested Citation

  • Hahn, Peter D. & Lasfer, Meziane, 2016. "Impact of foreign directors on board meeting frequency," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 295-308.
    • Handle: RePEc:eee:finana:v:46:y:2016:i:c:p:295-308
    DOI: 10.1016/j.irfa.2015.11.004
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    More about this item

    Keywords

    Agency conflicts; Board meetings; Compensation; Non-executive directors; Foreign directors;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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