Waiting Out Storms in the Absence; Outside Directors' Selective Attendance at Board Meetings

Abstract

This paper documents board meeting attendance rates of outside directors at Korean public companies depending on meeting agenda. By investigating 128,288 agendas brought to board meetings from 2011 and 2014, I find that outside directors show significantly higher absence rate for agendas bearing higher litigation risk than the agendas with less concern over such blame. The directors are more likely to be absent from a meeting where, for example, to decide upon a joint loan guarantee, while they seldom miss it where to approve financial statements or call for general shareholders' meeting. The finding reveals that the directors are less willing to attend meetings discussing agendas that possibly do harm to the interest of general shareholders in an attempt to evade litigation risk.