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Removing Vacant Chairs: Does Independent Directors’ Attendance at Board Meetings Matter?

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Listed:
  • Huilong Liu

    (University of International Business and Economics)

  • Hong Wang

    (Peking University)

  • Liansheng Wu

    (Peking University)

Abstract

In this paper we investigate whether independent directors’ attendance at board meetings enhances investor protection using a difference-in-difference approach. We find that independent directors’ attendance alleviates tunneling. This effect is more pronounced in non-state-owned enterprises (non-SOEs) than in state-owned enterprises. The reinforcement of external supervision substitutes for the role of independent directors’ attendance and this substitution effect is more significant in non-SOEs. Together, these results imply that independent directors’ attendance at board meetings can play an important role in protecting investors, especially in non-SOEs and when external supervision is weak. This paper sheds new light on independent directors’ function in corporate governance, and has implications for institutional improvements.

Suggested Citation

  • Huilong Liu & Hong Wang & Liansheng Wu, 2016. "Removing Vacant Chairs: Does Independent Directors’ Attendance at Board Meetings Matter?," Journal of Business Ethics, Springer, vol. 133(2), pages 375-393, January.
    • Handle: RePEc:kap:jbuset:v:133:y:2016:i:2:d:10.1007_s10551-014-2402-6
    DOI: 10.1007/s10551-014-2402-6
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