Removing Vacant Chairs: Does Independent Directors’ Attendance at Board Meetings Matter?
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.
KeywordsChina Corporate governance Independent directors Investor protection
We appreciate comments and suggestions from three anonymous reviewers. Huilong Liu and Liansheng Wu acknowledge financial support from the National Natural Science Foundation of China (Nos. 71202028, 71332007 and 71025003).
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