Journal of Applied Accounting Research

The determinants of board meetings: evidence from categorical analysis

Basil Al-Najjar
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Basil Al-Najjar, (2012),"The determinants of board meetings: evidence from categorical analysis", Journal of
Applied Accounting Research, Vol. 13 Iss 2 pp. 178 - 190
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JAAR
13,2
The determinants of board
meetings: evidence from
categorical analysis
178 Basil Al-Najjar
Middlesex University Business School, Middlesex University,
London, United Kingdom

Abstract
Purpose – The purpose of this paper is to investigate the determinants of the frequency of board
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meetings as an index for board activity including their monitoring role.

Design/methodology/approach – The research sample is composed of 120 UK firms based on their
market capitalization for the period from 2003 to 2008. The study applies multinomial logistic
modelling and conditional logistic modelling to investigate the frequency of board meetings.
Findings – The study finds that board size and structure are positively related to the frequency of
board meetings. In addition, a negative impact of audit committee diligence on the frequency board
meetings is reported. The study finds no evidence that the frequency of board meetings are reduced
when there is a CEO duality. Finally, the results show that firm size, leverage, free cash flows, and
Tobin’s Q have an impact on the frequency of board meetings.
Practical implications – This study shows the factors that affect the board effectiveness in the UK,
namely that board meetings, board composition, and board size, are key indicators for good internal
governance practices and, in turn, enhance board monitoring activities.
Originality/value – The research offers the first major study to examine the determinants of the
frequency of board meetings in UK non-financial firms. The paucity of the UK literature regarding
board effectiveness in the UK reinforces the empirical importance of the results for researchers,
managers, and UK policy makers.
Keywords Board meetings, Board structure, Internal governance, Corporate governance,
United Kingdom
Paper type Research paper

Journal of Applied Accounting
Research
Vol. 13 No. 2, 2012
pp. 178-190
r Emerald Group Publishing Limited
0967-5426
DOI 10.1108/09675421211254867
Introduction
This paper aims to investigate the determinants of the frequency of corporate board
meetings. Research in corporate governance focuses on board size and board
composition. For example, Boone et al. (2007) find that board size and composition are
determined by firm-specific factors and managerial characteristics. Similarly, Guest
(2008) supports this evidence using UK firms. There is limited evidence in the literature
as regard board activities. Vafeas (1999) detects a negative association between board
meetings (as an index for board activity) and firm value. The internal monitoring role
is not just related to the board of directors, corporate governance literature provides
evidence that other mechanisms are active in this role. For example, audit committees
play a dominant role as internal control mechanisms to effectively monitor firms’ audit
practices. This suggests that audit committees can alleviate agency problems by
reducing information asymmetry between insiders and outsiders (Klein, 1998).
Research in the area of board activity contains contradicting arguments. Lipton and
Lorsch (1992) argue that the main problem facing the directors is the lack of time to
properly manage their firms. On the same note, Conger et al. (1998) suggest that board
effectiveness improves with the frequency of board meetings. Given these arguments,
Vafeas (1999) suggests that more frequent board meetings leads managers to work in
 line with the interests of shareholders, since more meetings can be seen as active The
to maximize firm’s value and shareholders wealth. However, in his seminal work, determinants of
Jensen (1993) demonstrates that boards are not comparatively active, and that boards
are mainly active when firms face problematic situations (Vafeas, 1999). board meetings
The paucity of the UK literature on board effectiveness motivates this study
and underpins the empirical importance of the factors affecting the frequency of
board meetings. This study contributes to the existing empirical literature in three 179
dimensions. First, the study provides empirical evidence about the activity of the
boards by stressing the importance of the frequency of meetings; the empirical
analysis employs multinomial logistic model to capture this issue. Previous studies
ignore this matter and apply regression analyses using board meetings as an index for
board activity (see e.g. Vafeas, 1999; Brick and Chidambaran, 2007). Second, the study
considers the importance of subcommittees, in particular, the effect of audit committee
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diligence on boards’ meeting decisions. Vafeas (1999) examines this subject, however,
he employs a general index for standing committees measured as the total number of
existing committees. Third, importance of free cash flows as an index for agency
costs and thus examine in more detail corporate governance within the agency
context is empirically examined. This evidence is provided using a unique updated
panel data composed of 120 UK firms selected from 250 large firms based on their
market capitalization for the period from 2003 to 2008.
We posit that board meetings are determined by two categories of factors:
First, internal governance factors, including board size, independent directors,
audit diligence, and CEO duality. The second set of factors is firm specific and includes
firm size, leverage, free cash flows, growth opportunities, and Tobin’s Q. Hence it is
argued that governance activities can be seen as either substitutes or complements,
and hence the expected impact of these governance factors on the efficacy of the
boards is not clear.
The results provide evidence for the importance of internal corporate governance
control systems on the frequency of board meetings. For firms with regular board
meetings, the study finds that board size and structure are positively related to board
meetings. This means that internal governance monitoring mechanisms are found to
be complements to each other in such firms. The study also finds a negative impact of
audit committee diligence. There is no evidence that board activity is reduced when
there is a CEO duality. Finally, the study provides evidence that firm size, leverage, free
cash flows, and Tobin’s Q impact board activity. The study employs conditional fixed
effects logistic models to check the robustness of the results.
The study is organized as follows: the second section discusses the determinants of
the frequency of board meetings, the next section presents the data and methodology,
in the penultimate section the results are discussed, and final section concludes
and summarizes.

Determinants of the frequency of board meetings

In this section, the rationale behind adopting the econometric model employed in the
analysis is provided. The code of best practice issued by the Cadbury Committee in
1992 recommends that the role of chairman and CEO should be separated to avoid the
concentration of power in “boardrooms” as well as to employ independent directors to
help board discussions. The code concentrates on the importance of internal
monitoring systems in the firms without stressing board meetings (Cadbury, 1992;
Lasfer, 2002). Hence, if board meetings reflect board activity, then firms with separate
 JAAR chairman and CEO roles should meet more frequently since more discussion will be
13,2 required within the board.
According to the Cadbury report (1992) boards are responsible for providing firms’
strategic objectives, providing the required leadership to achieve these objectives,
supervising management and reporting to shareholders. It is argued that the role of
the boards in UK is less efficient than in the USA due to the weaker role of outside
180 directors in UK (see e.g. Guest, 2008). One reason for this weaker role is the informal
appointment process followed for these directors (Higgs, 2003; Guest, 2008). In
addition, the nature of UK corporate governance and the institutional ownership role
will lead to less active boards (Guest, 2008). Furthermore, empirical studies have found
that board structure in the UK has no impact on firm performance or monitoring
activities (see e.g. Vafeas and Theodorou, 1998; Franks et al., 2001). However, it can be
argued that independent directors will have a stronger role in the UK as the roles of
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chairman and CEO are separated and, consequently, UK boards should have a better
monitoring role (see e.g. Lasfer, 2002). It can be argued that board meetings in UK will
serve as a better proxy for the internal monitoring role since UK firms can adjust their
board meetings more easily than changing their structure or size. Vafeas (1999)
supports this argument. There are two categories of variables that affect the meetings
of the board: internal governance mechanisms and firm-specific factors.

Internal governance mechanisms

The board’s monitoring role has received much attention in finance and governance
research. Boone et al. (2007) examine and find support for the monitoring role of the
board, through investigating the determinants of board size and structure in the USA.
Similarly, Guest (2008) reports that UK boards almost share the determinants of board
size and composition as in the USA. Weisbach (1988) demonstrates that independent
directors are more willing to replace management than others in cases of poor
performance, while Adams (2005) argues that internal monitoring activities improve in
the presence of poor performance. However, there is limited evidence in the literature
regarding board meetings. Vafeas (1999) examines the effect of board meetings on firm
performance and detects an inverse relationship between board meetings and firm
value. In the same vein, Brick and Chidambaran (2007) report that firm characteristics
and governance activities are key determinants of board meetings. There is no
evidence (as far as the researcher has been able to ascertain) regarding this issue in
the UK. This study, thus aims to bridge this gap in the UK literature and investigate
the determinants of the frequency of board meetings.
It is argued that board size has an important effect on board effectiveness which can
be measured by board meetings (see e.g. Vafeas, 1999). Organizational theory
highlights the importance of more allocated time for large groups to reach their
decisions (Vafeas, 1999). From a governance perspective, Yermack (1996) detects an
inverse relationship between board size and firm value. Consequently, it is expected
that board size increases the activity of the board by increasing demand for board
meetings. Vafeas (1999) and Brick and Chidambaran (2007) adopt this argument.
Vafeas detects a positive association between board size and board meetings.
Consequently, it is argued that the larger the board size, the more demand on board
meetings.
The role of independent directors is documented as having an important impact on
monitoring activities (see e.g. Weisbach, 1988; Boone et al., 2007; Guest, 2008). If
independent directors are seen as a good corporate governance tool, then independent
 directors will demand more board meetings. In addition, Vafeas (1999) argues that the The
more outsiders are on the board, the more the need for board meetings, due to the more determinants of
time required in briefing the members of the board. Brick and Chidambaran (2007)
find some evidence of a positive relationship between independent directors and board board meetings
meetings. This argument is carried forward and a positive relationship between
board meetings and independent directors is expected.
Vafeas (1999) highlights the importance of subcommittees on board activity, and 181
includes the number of standing board committees in his model. He argues that more
authority delegation is required in the presence of subcommittees and, in turn, there is
less demand for board meetings. However, it is arguable that the more the delegation,
the more the need for coordination among the directors and, indeed, the more need
exists for board meetings. This study includes the diligence of the audit committee,
measured as the number of audit meetings (see e.g. Raghunandan and Rama, 2007) and
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argue that there is a relationship between audit diligence and board activity.
Finally, the study investigates the effect of CEO duality on board meeting frequency.
The study adopts Vafeas’ argument that if board meetings can serve as an index for
internal monitoring, then boards with CEO duality may be expected to have fewer
meetings. This is due to the dominance of the CEO over the other members of the board
(Vafeas, 1999).

Firm-specific factors
The study also include different firm-specific factors in the analysis. There is
considerable evidence in the literature that firm size has an effect on internal
monitoring. Boone et al. (2007) and Guest (2008) detect a positive relationship between
firm size and internal monitoring (measured by board size and structure). They argue
that large firms are more complex and more demanding of internal monitoring.
Sharma et al. (2009), Raghunandan and Rama (2007) and Mendez and Garcia (2007),
detect a positive relationship between firm size and audit meetings (as an index for
internal control mechanisms). It can be argued that large firms are more mature
since they have the required knowledge to deal with problems and hence less demand
for different internal monitoring activities including board meetings. Therefore,
this study argues that firm size is an important determinant of the frequency of
board meetings. Debt level can also be seen as an important factor that affects
internal monitoring mechanisms. Dechow et al. (1996) find a positive association
between the tendency to fraud and the leverage ratio, arguing that firms with high
leverage ratios are more likely to deal with fraud issues. Such firms are therefore
willing to improve their internal monitoring, since high leverage may reflect greater
agency problems and, in turn, generate more demand for board meetings.
Raghunandan and Rama (2007) adopt this argument for audit meeting frequency as
an index for internal monitoring.
This study also considers the effect of growth opportunities on the frequency of
board meetings. Growth opportunities can be viewed as an indicator for fraud
(Raghunandan and Rama, 2007; Penman, 1996), and hence more internal monitoring
is required in these firms. This study uses market-to-book ratios to serve as a proxy
for growth opportunities (Deli and Gillan, 2000; Klein, 2002) and expect a positive
relationship between the frequency of board meetings and growth opportunities.
Boone et al. (2007) argue that the net benefits of monitoring increase as the ability to
use private benefits increases, suggesting that firms tend to improve their internal
quality control if the private benefits are significant and, in turn, increase the demand
 JAAR for board meetings. This argument is in line with Jensen (1986) who suggests the
13,2 importance of reducing free cash flows for alleviating agency costs and conflicts.
Accordingly, free cash flows can increase agency problems (Shleifer and Vishny,
1986), and therefore more internal monitoring is required. Hence, this study includes
free cash flows in the analysis.
Finally, following Brick and Chidambaran (2007) and Vafeas (1999) this study
182 includes firm value in the model, measured as Tobin’s Q. Vafeas (1999) argues that
the relationship between firm value and board meetings is not clear. On the one hand,
there should be a positive relationship between firm value and board meetings, when
the board meets less than it should, since this will increase “overemphasizing costs”.
On the other hand, board meetings should be negatively associated with firm value,
when the benefits are overemphasized. Consequently, the current study argues that
firm value affects the frequency of board meetings and leaves the direction of this
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relationship to the empirical analysis.

Data and methodology

Data
The Combined Code on Corporate Governance (2003) asks companies to set up audit
committees and to disclose their activities and other governance activities in annual
reports. However, some firms started providing such information earlier (following
their USA counterparts) as they followed the recommendations of the Blue Ribbon
Committee (1999) and the Sarbanes-Oxley Act (2002) in the USA. The initial sample
consists of the largest 250 UK firms based on their market capitalization. Board
meetings, audit meetings, board size, board composition, and CEO duality were
collected manually from firms’ annual reports. The other financial variables
investigated are collected from Datastream. The study includes firms across the
industries[1] and excludes financial firms and firms without information about
the audit committee for the period investigated. The final sample is composed of
120 firms for the period spanning from 2003 to 2008, however, due to missing
information around 584 observations with around 113 firms, with the full
information.
Table I shows that audit meetings are increasing among most categories (except for
the last category), indicating that more frequent board meetings are associated with
more audit meetings. As a result, more coordination is required among the board and
the subcommittees, including the audit committee. The largest board size and the
highest independent directors are within Group 2 (regular meetings). Accordingly,
it can be argued that firms with large boards and high percentages of independent
directors that meet regularly are those that enjoy good governance practices. In
addition, leverage is improving across the categories (except for the third category),
suggesting that firms with high financial leverage tend to have more active boards.
Moreover, there is some evidence that board meeting frequency decreases with firm
size (this can be seen through the movement from Category 2 to Category 4).
Consequently, large firms tend to rely less on board meetings as large firms may have
alternative monitoring techniques, such as institutional investors, thus creating a
lower demand for board meetings. Finally, free cash flows (as source of agency
conflicts) are reduced when boards meet more frequently (this can be seen from the
movement from Category 1 to Category 3). For this reason, board meetings can be seen
as an active tool to alleviate agency costs by reducing free cash flows within
management hands.
 Variable Mean SD Minimum Maximum
The
determinants of
Low-frequent meetings Bodsize 2.217 0.304 1.609 2.99 board meetings
Indep 0.588 0.143 0.3 1
Audmeet 1.229 0.338 0 2.197
Size 13.47 1.787 8.23 17.00
Lev 0.279 0.150 0 0.659 183
MB 0.845 0.950 2.30 5.019
FCF 0.812 2.293 1.46 14.60
TOBQ 1.957 2.889 0.156 11.76
CEO 0.080 0.272 0 1
Bodmeet 5.382 0.860 2 6
Regular meetings Bodsize 2.294 0.263 1.609 3.044
Indep 0.612 0.120 0.285 1
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Audmeet 1.40 0.363 0.693 3.13

Size 14.45 1.767 10.00 19.33
Lev 0.252 0.159 0.006 1.17
MB 1.03 0.789 0.776 5.27
FCF 0.716 1.26 0.206 9.27
TOBQ 1.00 1.18 0.098 10.86
CEO 0.071 0.257 0 1
Bodmeet 7.972 0.773 7 9
Bodsize 2.21 0.236 1.60 2.77
More frequent meetings Indep 0.582 0.109 0.25 0.923
Audmeet 1.43 0.271 0.693 2.197
Size 14.39 1.42 10.28 17.20
Lev 0.230 0.162 0 0.760
MB 1.17 1.008 0.713 4.57
FCF 0.442 0.496 0.163 3.630
TOBQ 1.07 1.524 0.147 10.45
CEO 0.054 0.228 0 1
Bodmeet 10.87 0.930 10 13
High-frequent meetings Bodsize 2.09 0.186 1.60 2.48
Indep 0.541 0.100 0.333 0.75
Audmeet 1.29 0.315 0.693 1.94
Size 14.01 1.62 9.74 16.74
Lev 0.347 0.224 0.035 0.795
MB 0.760 1.158 2.99 2.51
FCF 0.446 0.474 0.083 1.678
TOBQ 0.832 0.434 0.290 1.966
CEO 0.043 0.208 0 1
Bodmeet 15.69 2.63 14 25
Notes: Bodsize, natural logarithm of number of members in the board of directors; Indep, percentage
of independent directors on the board; Audmeet, natural logarithm of the frequency of audit meetings;
Size, firm size measured by total assets; Lev, total debt to total assets ratio; MB, natural logarithm of
market to book ratio; FCF, free cash flows per share; TOBQ, Tobin’s Q; CEO is 1 if the CEO is a Table I.
member of the board and 0 otherwise; Bodmeet, number of boards meetings Descriptive analysis

Model
The study employs the multinomial logistic model to investigate board effectiveness.
The study applies this approach to capture the effect of the independent variables on
board meeting frequency. In addition, this approach will minimize the endogeneity
problem with the other internal control monitoring factors as we are dealing with a
 JAAR categorical dependent variable. According to Aivazian et al. (2006) the problem of
13,2 endogeneity is greatly reduced when the dependent variable is a categorical variable
compared to when the dependent variable is a continuous variable. This approach
therefore might help in reducing such a problem in the model[2]. Accordingly, this
study benefits from this approach in two ways: investigating the different categories of
board meetings; and mitigating the problem of endogeneity in the model. The
184 following model thus is estimated:

PðYi ¼ mÞ XK
ln ¼ Zmi ¼ am þ bmk Xik þ ei ;
PðYi ¼ 3Þ k¼1

where the probabilities are computed using the following equation:

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expðZmi Þ
PðYi ¼ mÞ ¼
P
M
1þ expðZhi Þ
h¼2

where X is a vector of independent variables that include Bodsize as the natural

logarithm of number of members on the board of directors, Indep the percentage
of independent directors on the board, Audmeet the natural logarithm of the frequency
of audit meetings, Size the firm size measured by total assets, Lev the total debt-to-total
assets ratio, MB the market-to-book ratio, FCF the free cash flows per share, TOBQ
the Tobin’s Q (measured as book value of total assets plus market value of equity
minus book value of equity divided by book value of total assets), and ei the error term.
The four categories of the dependent variable are:
(1) if boards meet from two to six times (low frequent meetings), 188 observations
fall within this category;
(2) if boards meet seven to nine times (regular frequent meetings), 295
observations fall within this category;
(3) if boards meet 10-13 times (more frequent meetings), 128 observations fall
within this category; and
(4) if boards meet more than 14 times (high-frequent meetings), 23 observations
fall within this category.
It should be mentioned that the probability of being included in other categories will be
compared to the probability of being included in the reference category, thus there will
be M-1 models to be estimated. This study also is interested in investigating “the more”
meeting frequency and hence the base category in the analysis (3) reflects more
frequent meetings with a frequency of 128 observations compared to Category 4 which
is 23 observations.
To check for the robustness of the analysis logistic regression analysis is applied
with a dependent variable of 1 if the board meets more than the average meetings
within the sample (eight meetings) and 0 otherwise.
For multicollinearity purposes the correlation matrix is reported in Table II. There
are no high correlations among the variables and hence multicollinearity does not exist
in the data (one notable correlation is between board size and firm size)[3]
 Bodsize Indep Audmeet Size Lev MB FCF TOBQ CEO
The
determinants of
Bodsize 1.000 board meetings
Indep 0.108*** 1.000
Audmeet 0.443*** 0.247*** 1.000
Size 0.509*** 0.368*** 0.461*** 1.000
Lev 0.077 0.054 0.005 0.001 1.000 185
MB 0.017 0.014 0.010 0.007 0.061 1.000
FCF 0.311*** 0.082** 0.134*** 0.255*** 0.029 0.017 1.000
TOBQ 0.054 0.100** 0.013 0.302*** 0.289*** 0.011 0.079 1.000
CEO 0.079** 0.031 0.130*** 0.084** 0.024 0.027 0.112 0.007 1.000
Table II.
Notes: Variables are as defined in Table I; ***,**significant at 1 and 5 per cent, respectively Correlation matrix
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Regression results
Table III reports the results for the multinomial logistic model, in which the dependent
variable is a categorical variable that takes the following values: 1 if the boards
meet less frequently (two to six times); 2 if boards meet regularly (seven to nine times);
3 if the boards meet more frequently (10-13 times); and 4 if boards meet most frequently
(more than 14 times). As discussed in the methodology section, the results are provided
for three categories (1, 2, and 4 given 3 is the base category). The results indicate that
there is some evidence that board size and independent directors are positively related
to board activities (measured by board meetings). This result is found within the
second category (regular meetings). These findings are consistent with the expected
signs for board size and independent directors. Hence, board meetings improve by
board size and its structure, suggesting that these internal governance mechanisms
can be seen as complements not substitutes. These results are consistent with the
findings of Vafeas (1999) and Brick and Chidambaran (2007). Regarding the effect of
audit diligence (measured as audit meetings) a significant negative sign is detected.
This result is consistent with the view that the delegation of authority from the board
to subcommittees will create less demand for board meetings (Vafeas, 1999). However,
this result contradicts the descriptive analysis that shows the importance of
coordination between the board and the subcommittees. Interestingly, the results also
show that there is a negative relationship between firm size and the board’s meeting
frequency. This finding contradicts the expected positive sign reported by Vafeas
(1999) and Brick and Chidambaran (2007). One possible explanation is that large firms
have less asymmetric information and have strong alternative external monitoring
mechanisms (such as the market and the supplier of debt) placing less demand on
board meeting frequency. However, this contradicts the arguments of Jensen (1986) that
large firms are more vulnerable to agency conflicts and, in turn, more frequent board
meetings are required to alleviate these conflicts. Furthermore, the study finds
a positive relationship between the frequency of board meetings and leverage
ratio, suggesting that leveraged firms are more willing to improve their internal
monitoring, since high leverage can be seen as an indicator of greater agency problems.
Concerning growth opportunities, the result is negative and significant. This
contradicts the expectations of a positive relationship between growth opportunities
and the frequency of board meetings. Given the view that large firms are more likely to
have less growth opportunities (Brick and Chidambaran, 2007), one can explain the
negative sign of growth opportunities in the following way: that large firms with less
 JAAR Model 1 Model 2
13,2 Category Variables Coefficient z Coefficient z

Low-frequent meetings Cons 2.93*** 2.75 2.97*** 2.93

Bodsize 0.832 1.26 0.825 1.3
Indep 2.364 1.4 2.50 1.42
186 Audmeet 1.47*** 4.78 1.49*** 4.44
Size 0.339*** 2.64 0.346*** 2.78
Lev 2.77*** 4.42 2.85*** 5.08
MB 0.175 1.06 0.166 0.98
FCF 0.487*** 4.36 0.487*** 4.11
TOBQ 0.055 0.44 0.055 0.44
CEO 0.304 0.9
Regular meetings Cons 0.736 0.65 0.784 0.76
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Bodsize 1.80*** 6.84 1.786*** 7.23

Indep 2.47*** 3.19 2.42*** 2.93
Audmeet 0.602*** 5.95 0.591*** 5.48
Size 0.227** 2.22 0.22*** 2.48
Lev 1.682*** 3.37 1.67*** 3.42
MB 0.246* 1.83 0.24* 1.84
FCF 0.323*** 3.01 0.313*** 3.1
TOBQ 0.189 1.58 0.186 1.62
CEO 0.154 0.28
High-frequent meetings Cons 3.67 1.06 3.58 1.07
Bodsize 2.03 0.73 2.06 0.69
Indep 2.18 1.19 2.29 1.04
Audmeet 0.262 0.24 0.232 0.19
Size 0.005 0.01 0.017 0.04
Lev 5.360** 2.47 5.40** 2.51
MB 0.545** 2.07 0.554** 2.35
FCF 0.356*** 3.27 0.347*** 3.1
TOBQ 0.756** 2.13 0.766** 2.22
CEO 0.279 0.23
No. of observations 548 547
R2 0.086 0.087
Table III.
Multinomial logistic Notes: Variables are as defined in Table 1; standard errors are corrected using time clustering; Model 1
regression analysis excludes CEO and Model 2 includes it; ***,**,*significant at 1, 5, and 10 per cent, respectively

growth opportunities require less internal monitoring, since such firms have other
strict alternative (internal and external) monitoring mechanisms.
Moreover, free cash flows are positively related to the frequency of board meetings,
thus free cash flows can be seen as an agency cost indicator and as a result more
internal monitoring is required. Consistent with Vafeas (1999) a negative relationship
between firm value and the activity of the board is detected. Finally, the study could
not find evidence to support any significant impact of CEO duality on the frequency of
board meetings.
In Table IV the marginal effects of the multinomial logistic model is reported,
as the marginal effects measure the impact of a one unit change in the selected variable
on the probability of selecting another alternative, in which the marginal effect can be
similarly explained as the slopes in the regression analysis. The results indicate no
significant difference from what the study reports in the results of the multinomial
logistic model.
 Model 1 Model 2
The
Category Variables dy/dx z dy/dx z determinants of
board meetings
Low-frequent meetings Bodsize 0.074 0.72 0.072 0.69
Indep 0.141 0.43 0.175 0.52
Audmeet 0.209*** 2.85 0.214*** 2.67
Size 0.036** 2.42 0.038*** 3.23 187
Lev 0.298*** 2.71 0.314*** 3.20
MB 0.004 0.09 0.003 0.22
FCF 0.051*** 4.22 0.052*** 4.20
TOBQ 0.040*** 3.33 0.040*** 3.34
CEO 0.076* 1.87
Bodsize 0.053* 1.67 0.349*** 4.50
Regular meetings Indep 0.068*** 3.72 0.279 1.05
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Audmeet 0.007 0.659 0.060 1.02

Size 0.003 0.523 0.007 0.75
Lev 0.062** 2.46 0.021 0.30
MB 0.006** 2.22 0.034** 2.32
FCF 9E-3 1.11 0.008 0.79
TOBQ 0.011** 2.44 0.047*** 3.03
CEO 0.074 0.68
High-frequent meetings Bodsize 0.053* 1.67 0.05* 1.65
Indep .068*** 3.72 0.070*** 3.16
Audmeet 0.007 0.44 0.004 0.43
Size 0.004 0.64 0.017 0.62
Lev 0.062** 2.46 0.062* 2.31
MB 0.006** 2.22 0.006** 2.59
FCF 9E-3 1.11 8E-3 0.75
TOBQ 0.011** 2.44 0.011** 2.43
CEO 0.005 0.19
Notes: Variables are as defined in Table I; Model 1 excludes CEO and Model 2 includes it; Table IV.
***,**,*significant at 1, 5, and 10 per cent, respectively Marginal effects

Robustness of the results

In order to check for robustness, the study re-estimates the model in Table II
by employing the conditional fixed effects model, in which the dependent variable
is a dummy that takes 1 if the board meets more than the average meetings of the
sample (eight times) and 0 otherwise (see Table V). The independent variables are the
same as in Table I. The results confirm the importance of audit diligence, firm size, and
free cash flows in determining the frequency of board meetings. The higher the
frequency of audit meetings, the greater the demand for board activity; thus these
monitoring mechanisms can be seen as complements, not substitutes. Additionally,
large firms require less internal monitoring as they are more exposed to external
monitoring and have other strict alternative monitoring mechanisms. The study also
reports a positive relationship between free cash flows and the activity of the
board. Therefore, free cash flows indicate agency conflicts and, in turn, require
more board meetings.
The results do not suggest any significant impact of board size, board structure,
leverage, firm value, and CEO duality on the boards’ meeting frequency.
 JAAR Model 1 Model 2
13,2 Variables Coefficient z Coefficient z

Bodsize 0.095 0.06 0.107 0.07

Indep 4.948 1.58 4.97 1.59
Audmeet 3.16*** 3.18 3.13*** 3.16
188 Size 1.48** 2.35 1.50** 2.4
Lev 3.76 1.47 3.65 1.42
MB 0.174 0.53 0.189 0.57
FCF 0.891** 2.17 0.885** 2.16
TOBQ 0.438 0.83 0.464 0.86
CEO 1.24 0.67
Log likelihood 77.5781 77.3462
LR 27.71*** 27.24***
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No. of observations 229 229

Table V. Notes: Variables are as defined in Table I; standard errors are corrected using time clustering; Model 1
Conditional logistic model excludes CEO and Model 2 includes it; ***,**,*significant at 1, 5, and 10 per cent, respectively

Summary and conclusions

This paper is one of the first studies to empirically examine the board meetings in UK.
In particular, this study explores two categories of indicators that might have an
impact on the frequency of board meetings: first, internal monitoring mechanisms,
such as audit committee diligence (meetings), board size, independent directors, and
CEO duality. Second, the current study considers different firm-specific factors, such
as, firm size, leverage, growth opportunities, and free cash flows. The sample is
composed of 120 UK firms based on their market capitalization. Firms that provide the
required board meetings information are included in the sample. The study examines
the time span from 2003 to 2008. The study applies different categorical analysis,
including multinomial logistic modelling, and conditional logistic modelling to
minimize the endogeneity problem and to allow us to investigate these determinants
across the groups. The results indicate that, boards meet more frequently when firms
have large boards and more independent directors. These results provide evidence that
these internal governance factors signal better internal monitoring, and generate more
demand for board meetings. These findings are consistent with the results of Vafeas
(1999) and Brick and Chidambaran (2007). In addition, the study finds that audit
meetings affect the board meetings decision with opposite signs in the analysis.
Furthermore, there is no significant result between CEO duality and the board
meetings. As regards firm-characteristic factors, the study shows that the frequency of
board meetings decreases with firm size and growth opportunities, suggesting that
large firms are more exposed to external monitoring and have other strict alternative
monitoring activities. Moreover, firms with high leverage ratios tend to place demand
on boards to meet more frequently, suggesting that financial leverage might be seen as
an index for agency problems. Furthermore, firms with high free cash flows (as an
agency cost index) require more board meetings. In line with the findings of Vafeas
(1999) a negative relationship between firm value and the activity of the board is found.
For robustness purposes, the model is re-estimated using conditional logistic model.
The findings are consistent regarding audit meetings, firm size, and free cash flows.
The results are important for researchers, mangers, and the UK policy makers
to stress on the importance of corporate governance in UK firms and to stress on the
 importance for these firms to disclose such information in their annual reports. The
The results show that board meetings, board composition, and board size are key determinants of
indicators for good internal governance practices and, in turn, enhance board
monitoring activities. board meetings
Notes
1. The industries in the data set come from oil and gas, basic materials, consumer goods, health
care, consumer services, telecommunications, utility, and technology. Firms with board 189
meetings vary each year, from 92 firms in 2003 to 113 in 2008. The largest number is in 2007
with 114 firms included.
2. The study also applies the 2SLS technique with board meetings as a continuous variable,
and all the internal corporate governance factors and Tobin’s Q as endogenous variables
with year lags of the endogenous variables as instruments. The results are not significantly
different from the results provided in this paper. Hence, the results do not suffer from
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endogeneity problem.
3. When checked for the pooled model, using continuous dependent variable, the VIF for the
model is less than 2, indicating no multicolinearity.

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Corresponding author
Basil Al-Najjar can be contacted at: b.al-najjar@mdx.ac.uk

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