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Shareholder
Shareholder rights, rights
telecommunications and director
attendance around the world
John Nowland 221
Illinois State University, Normal, Illinois, USA
Received 7 March 2018
Revised 5 July 2018
Accepted 5 July 2018
Abstract
Purpose – This study aims to document the variation in director attendance rates around the world and
investigate the influence of cross-country differences in law and infrastructure on director attendance
practices.
Design/methodology/approach – Director attendance data are hand-collected from company annual
reports and are related to differences in shareholder rights, director liability and transportation and
telecommunications infrastructure across countries.
Findings – Using a hand-collected data set of 4,344 directorships from 33 countries, the results indicate that
director attendance is significantly lower in emerging markets and is positively related to the extent of
shareholder rights and the quality of telecommunications infrastructure.
Originality/value – For policymakers and shareholders, the findings of this study indicate that there is
substantial variation in director attendance practices around the world. Across all markets, director
attendance is higher when the telecommunications infrastructure better enables the potential for virtual
attendance, thereby allowing directors to participate in meetings when they cannot be physically present. In
emerging markets, director attendance is also higher where there is a stronger emphasis on shareholder
rights, highlighting an avenue for improved director attendance by strengthening shareholder involvement in
major corporate decisions.
Keywords Attendance, Board of directors, Infrastructure, Director liability, Shareholder rights
Paper type Research paper

Introduction
A recent news report highlighted that 19 per cent of the directors in top Indian companies
attend less than 75 per cent of board meetings[1]. This indicates a director attendance
problem in India that is roughly ten times the magnitude of that of the USA and roughly
three times that of Australia (Chapple et al., 2018). Academic studies have also documented
average attendance rates of 86 per cent in Taiwan, 68 per cent in South Korea and 95 per
cent in Australia (Chou et al., 2013; Min and Verhoeven, 2013; Gray and Nowland, 2018). Yet,
although these figures show that there is substantial variation in director attendance
practices across markets, there has been no prior investigation as to why this is the case.
This study tackles this issue by examining why director attendance rates are higher in some
countries and lower in others.
Corporate directors are entrusted by shareholders to monitor and advise management.
Before meetings, directors generally receive meeting agendas and other relevant documents.
However, attending board and committee meetings is the primary means for directors to
source additional information from management, interact with other board members and Accounting Research Journal
perform their monitoring and advising functions. Although director attendance is not Vol. 32 No. 2, 2019
pp. 221-235
compulsory, policymakers in a number of countries around the world have taken initial © Emerald Publishing Limited
1030-9616
steps to recognize its importance by mandating the disclosure of attendance practices in DOI 10.1108/ARJ-03-2018-0047
ARJ annual reports (or proxy material) and encouraging improved attendance in corporate
32,2 governance codes.
In academia, a growing literature documents that lower director attendance is associated
with greater managerial opportunism, in the form of higher earnings management and
greater tunneling of firm resources (Sarkar et al., 2008; Liu et al., 2016), and lower firm
performance (Brown and Caylor, 2006; Chou et al., 2013; Min and Verhoeven, 2013). Cai et al.
222 (2009) also showed that directors are penalized by shareholders for poor attendance, as
directors seeking re-election receive, on average, 14 per cent lesser votes if identified as
having poor attendance records.
To better understand why directors are absent from meetings, prior studies have
examined the director and firm-level factors associated with better attendance practices.
Adams and Ferreira (2008) found that director compensation and reputation concerns are
associated with higher director attendance. Adams and Ferreira (2009) documented
gender differences in director attendance practices, with female directors having better
attendance records than male directors. Nowland and Simon (2018) showed that the
attendance of directors is influenced by the attendance practices of their board
colleagues. Other studies show that directors with numerous directorships and higher
workloads are less likely to attend meetings (Jiraporn et al., 2009; Gray and Nowland,
2018).
The contribution of this study is that it investigates the variation in attendance
practices of corporate directors around the world. This study proposes that the variation
in director attendance practices across countries is significantly related to country-level
differences in shareholder rights, director liability and transportation and
telecommunications infrastructure. In countries with stronger shareholder rights,
director attendance is expected to be higher as directors play a more active role in
representing shareholder interests in firm decision-making. Director attendance is
expected to be positively related to director liability, as directors are more likely to attend
meetings to reduce the likelihood of any liability event occurring. Higher-quality
transportation and telecommunications infrastructure are expected to be positively
related to director attendance, as they make attendance in-person or via teleconferencing
easier.
To conduct this research, attendance data are hand-collected from the annual reports of
the largest firms in each market where individual director attendance data are disclosed.
The final sample includes 4,344 directorships from 33 countries in 2013. The analysis covers
markets in Asia (13), Europe (10), Africa (3), South America (3), Oceania (2) and the Middle
East (2). Initial testing indicates that director attendance is significantly lower in emerging
markets. Analysis of country-level factors indicates that director attendance around the
world is positively related to the extent of shareholder rights and the quality of
telecommunications infrastructure. No relationship is found between the extent of director
liability and director attendance practices.
The findings of this study have important practical implications. For policymakers, the
analysis in this paper highlights that stronger shareholder rights and improved
telecommunications infrastructure are associated with higher director attendance around
the world. In emerging markets, strengthening shareholder rights is particularly important
in improving director attendance. In all markets, better telecommunications infrastructure
appears to enhance the potential for virtual attendance, allowing directors to participate in
meetings when they cannot be physically present. For corporate boards, the results also
suggest that smaller boards and boards that hold fewer meetings are associated with better
director attendance around the world.
Literature review and hypotheses Shareholder
Corporate governance practices have received increased attention in recent years, with a rights
particular focus on the independence, busyness, gender diversity and expertise of corporate
boards. Yet, although the composition of boards and structure of board committees are
important issues, little attention has been paid to the actual participation of directors at
board and committee meetings. Although director attendance is by no means a perfect
measure of director performance, it does provide us with an understanding of a director’s
commitment and involvement in their directorship. For example, if directors attend 223
meetings, there is no certainty that they are performing their duties. But, if directors do not
attend meetings, shareholders have less confidence that their interests are being adequately
represented.
The prior literature on director attendance can be separated into two strands. The first
strand examines the effects of director attendance on firms and directors. For directors,
attendance at board and committee meetings is an identifiable measure of their commitment
to their directorship, which shareholders use to evaluate director performance. Poor
attendance has repercussions, with Cai et al. (2009) illustrating that directors up for re-
election receive 14 per cent less votes if they are identified as having poor attendance
records.
From a firm perspective, higher director attendance at board and committee meetings is
expected to improve the monitoring and advising outcomes of the board, which should lead
to better firm performance. Consistent with this expectation, Sarkar et al. (2008) found that
director attendance reduces opportunistic earnings management in India. Liu et al. (2016)
showed that director attendance enhances investor protection by reducing tunneling by
controlling shareholders in China. Brown and Caylor (2006) showed that director attendance
is one of the seven (out of 51) most significant corporate governance measures related to firm
performance in the USA. Chou et al. (2013) and Min and Verhoeven (2013) also showed that
director attendance is positively related to firm performance in Taiwan and South Korea.
The second strand of the literature on director attendance has examined director and
firm-level factors related to director attendance. Adams and Ferreira (2008) found that
attendance is better when director compensation is higher, indicating that monetary
incentives have an impact on director behavior[2]. They also found that attendance is worse
on larger boards (more opportunity for free-riding behavior) and better in larger firms and in
poor performing companies (where there is a greater reputational cost of missing meetings).
Adams and Ferreira (2009) found that female directors have better attendance records and
that director attendance is better if there is a higher presence of female and independent
directors on the board. Jiraporn et al. (2009) found that multiple directorships have a
negative impact on director attendance, as busy directors lack the time to attend meetings.
Gray and Nowland (2018) also showed that a greater workload (additional meetings) has a
negative effect on director attendance. Chou et al. (2013) found that director attendance is
related to director qualifications and firm ownership structure. Nowland and Simon (2018)
showed that the attendance behavior of directors is influenced by the attendance practices of
their board colleagues.
This study extends the current literature by investigating the cross-country variation in
director attendance practices. In particular, this research proposes that director attendance
practices are influenced by the extent of shareholder rights, director liability and
transportation, and telecommunications infrastructure in the country the firm is domiciled.
These country-level factors are expected to have an influence on director attendance, as
prior international studies indicate that national characteristics have an influence on
director decisions, e.g. accounting choices and chief executive officer (CEO firings
ARJ (Leuz et al., 2003; DeFond and Hung, 2004), as well as many other aspects of businesses,
32,2 such as firm financing, investment decisions, payout policies, equity valuations and the cost
of capital (La Porta et al., 2002; Chui et al., 2002; Hail and Leuz, 2006; Shao et al., 2013).
Shareholder rights refer to the ability of shareholders to be involved in major corporate
decisions. In countries with stronger shareholder rights, shareholders and their
representatives (boards of directors) are expected to be more active and involved in
224 corporate decision-making. This is consistent with prior studies that find that in countries
with stronger legal environments, directors play a more active role in board decision-
making, resulting in lower earnings management, more CEO dismissals for poor
performance and better overall firm performance (Leuz et al., 2003; DeFond and Hung, 2004;
Miletkov et al., 2017).
This study proposes that directors are more active (in their monitoring and advising
roles) on boards in countries with stronger shareholder rights. This is because boards in
these countries are more likely to represent the interests of all shareholders and directors
perceive that their involvement has a significant effect on the decision-making and
operating activities of the firm. In contrast, in countries with weaker shareholder rights, the
role of the board is likely to be diminished or dominated by the interests of controlling
owners or other stakeholders. Thus, directors may perceive that the board is merely a
superficial entity, as the board agenda and activities are influenced by other parties and the
real decision-making takes place outside of the board. Therefore, directors may perceive that
there is little differential impact whether they attend meetings or not. Thus, the first stated
hypothesis is:

H1. Higher shareholder rights are associated with higher director attendance around the
world.
The extent of director liability is also expected to influence director attendance practices.
Director liability refers to the ability of shareholders to sue and hold directors liable for
prejudicial actions. Director concern for the potential cost of any wrongdoing by the firm
under their watch is likely to be heightened if the magnitude of their personal liability is
potentially higher. To reduce the potential penalty to themselves, directors would choose to
be more involved in the activities of the board, so that monitoring is intensified and any
wrongdoing is more likely to be uncovered and corrected before it results in a liability to the
director. Therefore, higher director liability is expected to incentivize directors to attend
meetings to reduce the probability of any liability event occurring. Thus, the second stated
hypothesis is:

H2. Higher director liability is associated with higher director attendance around the
world.
Director attendance at board and committee meetings is also expected to be related to the
quality of the country’s transportation infrastructure. Directors need to travel to attend
meetings and a more efficient transportation system is expected to reduce the burden of
travel. This concept of transportation burden was highlighted by Masulis et al. (2012), who
showed that foreign directors have poorer attendance records than local directors because
foreign directors face greater logistical difficulties and time and energy drains from
international travel. In extending this concept to the country-level, this study proposes that
in countries with higher-quality transportation infrastructure, directors are able to travel to
meetings more efficiently, resulting in a lower travel burden and higher director attendance.
In countries with poorer quality transportation infrastructure, more time and effort are
needed from directors to attend meetings, creating a greater travel burden and lower Shareholder
director attendance. Thus, the third stated hypothesis is: rights
H3. Higher-quality transportation infrastructure is associated with higher director
attendance around the world.
In addition, director attendance is expected to be related to the quality of a country’s
telecommunications infrastructure. In recent years, attendance via teleconferencing has 225
become more popular. For example, the Australian Institute of Company Directors guidance
on director meetings states that “directors can use video or other technology to take part in a
meeting even if they are physically somewhere else as long as all directors consent to
this”[3]. Of course, attending meetings via teleconferencing is only possible if suitable
technology is in place and the quality of the telecommunications network has adequate
bandwidth and speed to facilitate participation in board and committee meetings via the use
of technology. In countries with higher-quality telecommunications infrastructure, director
attendance at meetings via teleconferencing is more likely to be a viable option, resulting in
fewer director absences. In countries with poorer-quality telecommunications infrastructure,
attendance via teleconferencing may not be feasible or may be limited, resulting in lower
director attendance practices. Thus, the fourth hypothesis states that:

H4. Higher-quality telecommunications infrastructure is associated with higher director

attendance around the world.

Data and variables

Sample
The sample selection process started by investigating whether director attendance data are
disclosed in annual reports (or equivalent documents) around the world. An initial list of
firms was sourced for all available countries on Computstat Global for the year 2013[4].
Then, as an initial exploration exercise, the 2013 annual reports of the top five companies by
total assets in each country were located online and searched for director attendance data[5].
Director-level attendance data for at least one firm (out of the top five) was found in 36
countries. Of these 36 countries, three markets were excluded from the final sample, as they
were missing country-level variables from the World Bank[6]. For the final sample of 33
countries, the annual reports of the top 20 firms by total assets were searched for director
attendance data[7]. Attendance data were found in 402 out of 660 firms. Attendance data for
all directors in these firms were then hand collected from annual reports (or equivalent
documents).
The required data for each directorship include director name, position title,
independence, number of board and committee meetings attended and number of board and
committee meetings eligible to attend during the year. Director gender was categorized on
the basis of director names and photos in annual reports. Directors who did not hold their
directorship for a full year but were reported as eligible to attend all meetings during the
year were removed from the sample[8]. Financial and industry data were sourced from
Compustat Global.
Table I shows that the sample includes 4,344 directorship–firm-year observations from
33 countries in 2013. This includes 2,875 observations from 20 emerging markets and 1,469
observations from 13 developed markets. Disclosure of director-level attendance information
is abundant in some markets and very limited in other markets. The largest numbers of
observations are from Thailand (310), South Africa (294) and India (292). The smallest
ARJ Attendance No. of No. of Total
32,2 Country rate directors firms RIGHTS LIABILITY TRANSPORT TELECOM assets

Emerging markets
Bangladesh 90.98 144 15 5 7 0.02 0.07 0.52
Chile 93.76 9 1 2 6 0.79 0.67 18.83
China 95.44 175 20 8 1 0.26 0.46 41.52
226 Colombia 87.92 16 2 5 7 0.57 0.52 44.47
Hong Kong 91.22 264 20 7 8 4.82 0.74 24.68
Indonesia 91.77 57 8 4 5 0.33 0.15 3.47
India 86.40 292 20 6 4 0.06 0.15 26.81
Kenya 88.72 94 10 4 2 0.10 0.39 0.84
Malaysia 92.16 210 20 7 9 1.63 0.67 10.85
Nigeria 93.63 136 18 7 7 0.02 0.38 1.41
Mauritius 90.54 173 17 5 8 1.05 0.39 0.42
Oman 89.79 126 14 4 5 1.28 0.66 0.70
Pakistan 83.87 246 20 5 6 0.04 0.11 1.57
Peru 92.85 9 1 3 6 0.40 0.39 2.70
Philippines 90.08 159 13 6 3 0.26 0.37 7.70
Russia 91.95 98 7 6 2 0.45 0.68 52.70
Saudi Arabia 90.54 82 8 4 8 0.94 0.61 8.86
Singapore 94.35 161 19 7 9 5.88 0.81 10.12
Sri Lanka 89.70 114 13 5 5 0.23 0.22 0.65
Thailand 88.87 310 20 4 7 0.64 0.29 9.54
All emerging
markets 90.15 2,875 266 5.7 5.9 1.19 0.41 13.10
Developed markets
Australia 96.20 187 20 8 2 2.95 0.83 15.38
Belgium 93.87 162 15 6 6 0.85 0.82 8.87
Finland 96.76 96 11 6 4 1.92 0.84 12.41
France 90.60 52 3 8 3 0.97 0.82 128.99
Germany 95.83 12 1 7 5 1.33 0.84 180.09
Greece 91.15 106 8 6 4 0.80 0.60 5.93
Japan 93.52 12 4 5 6 0.84 0.90 111.25
Netherlands 95.64 31 3 7 4 1.99 0.94 38.08
New Zealand 95.33 96 15 7 9 3.25 0.83 4.09
Portugal 89.99 125 10 6 5 1.13 0.62 15.18
South Africa 91.38 294 20 4 8 0.30 0.47 8.04
Switzerland 97.19 52 6 3 5 3.40 0.86 25.66
United
Kingdom 96.45 244 20 8 7 1.85 0.90 49.80
All developed
markets 93.91 1,469 136 6.2 5.7 1.54 0.74 24.27
Notes: The sample includes 4,344 directorship–firm-year observations from the largest companies in 33
countries in 2013. Director attendance rates are calculated as the number of board and committee meetings
the director attended divided by the number of board and committee meetings the director was eligible to
attend during the year. Shareholder rights is the extent of shareholder rights index (RIGHTS) sourced from
the World Bank’s Doing Business database. Director liability is the extent of director liability index
(LIABILITY) sourced from the World Bank’s Doing Business database. The transportation and
telecommunications infrastructure variables include the number of passengers carried by air transport
Table I. divided by the total population as (TRANSPORT) and the number of internet users per 100 people
Director attendance (TELECOM) sourced from the World Bank’s World Development Indicators. Total assets measured in
around the world billions of US dollars. Data are from Compustat Global, World Bank and annual reports
numbers of observations are from Peru (9), Chile (9) and Germany (12)[9]. Although some Shareholder
markets have a small number of observations, these observations enrich our cross-country rights
variation, so all available data are included in our main analysis.

Variables
Director attendance rates are calculated as the number of board and committee meetings the
director attended divided by the number of board and committee meetings the director was 227
eligible to attend during the year. Executive director is a dummy variable equal to one
for executive (inside) directors. Independent director is a dummy variable equal to one for
independent non-executive directors. Female director is a dummy variable equal to one for
female directors. Board size is the number of directors on the board. Board independence is
the proportion of independent directors on the board. Board females is the proportion of
female directors on the board. Meetings is the number of board and committee meetings the
director was eligible to attend during the year. Total assets is measured in billions of US
dollars. Return on assets is net income divided by total assets. Debt is total debt divided by
total assets. Growth is the growth rate of total assets from past year to this year[10].
Country-level variables are sourced from the World Bank, with higher values indicating
higher quality for all variables. The measure of shareholder rights, RIGHTS, is the extent of
shareholder rights index sourced from the World Bank’s Doing Business database and
specifically measures shareholders’ rights and role in major corporate decisions (range 0-10).
The measure of director liability, LIABILITY, is sourced from the World Bank’s Doing
Business database and measures the ability and available remedies for shareholders to hold
directors liable for prejudicial actions (range 0-10).
The two infrastructure variables are TRANSPORT and TELECOM, both sourced from
the World Bank’s Development Indicators database. TRANSPORT is the number of
passengers carried by air transport divided by the total population and proxies for the
quality of the transportation infrastructure[11]. TELECOM is the number of internet users
per 100 people and proxies for the quality of the telecommunications infrastructure. Table I
provides details of the shareholder rights, director liability and infrastructure variables by
country.

Descriptive statistics
Table I shows that average director attendance is 90.15 per cent in emerging markets and
93.91 per cent in developed markets. In unreported testing, the difference is significant at the
1 per cent level (t = 7.72). The highest average attendance rates are 97.19 per cent in
Switzerland, 96.76 per cent in Finland and 96.45 per cent in the UK. The lowest average
attendance rates are 83.87 per cent in Pakistan, 86.40 per cent in India and 87.92 per cent in
Colombia.
Table II reports descriptive statistics of the full sample. Director attendance rates vary
from 0 per cent to 100 per cent, with a mean of 91.42 per cent. A total of 2,511 out of 4,344
observations (57.8 per cent) have 100 per cent attendance. The sample is composed of 20 per
cent executive directors, 44 per cent independent non-executive directors and the remaining
36 per cent are non-independent, non-executive directors. A total of 9 per cent of the sample
are female directors. Average board size is 12.60 directors, with average board independence
of 44 per cent and average female board representation of 9 per cent. Directors are required
to attend an average of 13.28 board and committee meetings during the year. Average total
asset is US$16.88bn (using exchange rates on December 31, 2013). Average return on assets
is 5 per cent, debt ratio is 58 per cent and growth rate is 7 per cent.
ARJ Variables Mean Median Min Max Std
32,2
Director attendance rate (%) 91.42 100.00 0.00 100.00 15.25
Executive director 0.20 0.00 0.00 1.00 0.40
Independent director 0.44 0.00 0.00 1.00 0.50
Female director 0.09 0.00 0.00 1.00 0.28
Board size 12.60 12.00 3.00 32.00 4.51
228 Board independence 0.44 0.43 0.00 1.00 0.24
Board females 0.09 0.07 0.00 0.43 0.10
Meetings 13.28 11.00 1.00 88.00 9.82
Total assets 16.88 6.60 0.03 239.00 30.19
ROA 0.05 0.04 –0.34 0.49 0.07
Debt 0.58 0.59 0.01 1.00 0.18
Growth 0.07 0.07 –0.86 0.89 0.17
RIGHTS 5.86 6.00 2.00 8.00 1.42
LIABILITY 5.84 6.00 1.00 9.00 2.31
TRANSPORT 1.31 0.80 0.02 5.88 1.55
TELECOM 0.52 0.47 0.07 0.94 0.27

Notes: Director attendance rates are calculated as the number of board and committee meetings the
director attended divided by the number of board and committee meetings the director was eligible to
attend during the year. Executive director is a dummy variable equal to one for executive (inside) directors.
Independent director is a dummy variable equal to one for independent non-executive directors. Female is a
dummy variable equal to one for female directors. Board size is the number of directors on the board. Board
independence is the proportion of independent directors on the board. Board females is the proportion of
female directors on the board. Meetings is the number of board and committee meetings the director was
eligible to attend during the year. Total assets is measured in billions of US dollars. Return on assets is net
income divided by total assets. Debt is total debt divided by total assets. Growth is the growth rate of total
assets from last year to this year. Shareholder rights is the extent of shareholder rights index (RIGHTS)
sourced from the World Bank’s Doing Business database. Director liability is the extent of director liability
index (LIABILITY) sourced from the World Bank’s Doing Business database. The transportation and
telecommunications infrastructure variables include the number of passengers carried by air transport
divided by the total population as (TRANSPORT) and the number of internet users per 100 people
Table II. (TELECOM) sourced from the World Bank’s World Development Indicators. Data are from Compustat
Descriptive statistics Global, World Bank and annual reports

For the country-level variables, RIGHTS has a mean of 5.86 and varies from 2.00 to 8.00.
LIABILITY has a mean of 5.84 and ranges from 1.00 to 9.00. TRANSPORT has a mean of
1.31 and ranges from 0.02 to 5.88. TELECOM has a mean of 0.52 and varies from 0.07 to 0.94.
Thus, there is substantial variation in the country-level variables across the sample markets.
Table III shows the correlations between director attendance, shareholder rights, director
liability and the infrastructure variables. The analysis shows that director attendance is
positively correlated with RIGHTS, TRANSPORT and TELECOM. The correlation between
director attendance and LIABILITY is insignificant. Correlations between the shareholder
rights, director liability and infrastructure variables are generally low, except for
TRANSPORT and TELECOM, which have a pair-wise correlation of 0.67. To offset
multicollinearity concerns we estimate models with these variables individually, in addition
to the full model. The unreported correlations between other independent variables do not
raise any multicollinearity issues.

Empirical analysis
The empirical analysis relates director attendance to country-level shareholder rights,
director liability and infrastructure variables, while controlling for the effects of director,
Variables Attendance RIGHTS LIABILITY TRANSPORT TELECOM
Shareholder
rights
Attendance 1.00 0.12*** –0.01 0.10*** 0.17***
RIGHTS 1.00 –0.17*** 0.42*** 0.51***
LIABILITY 1.00 0.35*** 0.09***
TRANSPORT 1.00 0.67***
TELECOM 1.00
229
Notes: Pearson correlation coefficients between director attendance, shareholder rights, director liability
and infrastructure variables. Director attendance rates are calculated as the number of board and committee
meetings the director attended divided by the number of board and committee meetings the director was
eligible to attend during the year. Shareholder rights is the extent of shareholder rights index (RIGHTS)
sourced from the World Bank’s Doing Business database. Director liability is the extent of director liability
index (LIABILITY) sourced from the World Bank’s Doing Business database. The transportation and
telecommunications infrastructure variables include the number of passengers carried by air transport
divided by the total population as (TRANSPORT) and the number of internet users per 100 people
(TELECOM) sourced from the World Bank’s World Development Indicators. Data are from Compustat Table III.
Global, World Bank and annual reports. Significance is indicated at *10%, **5% and ***1% Correlations

firm and industry characteristics. Tobit models are used in the analysis because of the
censoring of the dependent variable at 0 per cent and 100 per cent. Standard errors are
clustered at the firm level. The full model is:

Director attendancei;j;k ¼ a þ Shareholder rightsk þ Director liabilityk þ Transportk

þ Telecommunicationsk þ Directori;j;k þ Firmj
þ Industry þ « i;j;k
(1)

where director attendance is the attendance rate of director i in firm j in country k,

shareholder rights is the shareholder rights index (RIGHTS) in country k, director liability is
the extent of director liability index (LIABILITY) in country k, transport is the quality of
transportation infrastructure (TRANSPORT)) in country k, telecommunications is the
quality of telecommunications infrastructure (TELECOM) in country k, director is a set of
director-level control variables for director i, firm is a set of firm-level control variables for
firm j and industry is a set of one-digit SIC dummy variables.

Shareholder rights, director liability, infrastructure and director attendance

This section investigates the relationships between shareholder rights, director liability,
transportation infrastructure, telecommunications infrastructure and director attendance.
Table IV displays the results of this analysis. In the first four specifications, the country-
level variables are included in the model individually. The fifth specification provides the
full model.
In the first specification, the coefficient on RIGHTS is 1.91 (t = 4.39), indicating that
higher shareholder rights are associated with higher director attendance. This result
supports H1 and shows that director attendance is higher in countries where shareholders
enjoy stronger legal rights and involvement in major corporate decisions. In the second
specification, the coefficient on LIABILITY is –0.17 (t = –0.70), indicating an insignificant
relationship between the extent of director liability and director attendance.
ARJ Tobit: Attendance rate (%)
32,2 Variables (1) (2) (3) (4) (5)

RIGHTS 1.91*** (4.39) 1.07** (2.24)

LIABILITY –0.17 (–0.70) –0.30 (–1.13)
TRANSPORT 1.13*** (2.98) –0.66 (–1.24)
TELECOM 16.57*** (6.79) 17.88*** (5.70)
230 Executive 13.41*** (8.81) 13.83*** (9.07) 13.79*** (9.06) 14.05*** (9.28) 13.93*** (9.17)
Independent 2.34* (1.81) 2.57** (1.98) 2.55** (1.97) 2.69** (2.09) 2.60** (2.02)
Female –0.77 (–0.41) –0.79 (–0.41) –0.74 (–0.39) –0.75 (–0.40) –0.79 (–0.42)
Board size –0.56*** (–4.32) –0.71*** (–5.63) –0.63*** (–4.88) –0.47*** (–3.64) 0.40*** (–2.99)
Board independence 1.63 (0.59) 1.56 (0.56) 0.30 (0.11) –2.87 (–1.01) –2.11 (–0.74)
Board females 11.89** (2.04) 14.06** (2.42) 14.05** (2.42) 5.83 (0.99) 3.96 (0.66)
Meetings –0.22*** (–4.16) –0.24*** (–4.55) 0.23*** (–4.30) –0.24*** (-4.55) –0.24*** (–4.52)
Ln (total assets) 0.93** (2.23) 1.74*** (4.64) 1.45*** (3.76) 0.74* (1.86) 0.29 (0.68)
ROA 2.05 (0.27) 0.45 (0.06) 1.05 (0.14) 4.33 (0.57) 5.54 (0.72)
Debt –8.52*** (–2.69) –7.85** (–2.46) –6.17* (–1.93) –6.73** (–2.14) –8.64*** (–2.70)
Growth –6.09** (–2.01) –6.81** (–2.24) –6.72** (–2.21) –3.67 (–1.20) –2.87 (–0.94)
Intercept 96.14*** (23.24) 104.59*** (24.07) 101.75*** (26.34) 99.36*** (25.86) 98.47*** (20.54)
Log likelihood –10,162 –10.171 –10,167 –10,148 –10,143
n 4,344 4,344 4,344 4,344 4,344

Notes: Tobit models relate director attendance to shareholder rights, director liability and infrastructure
using a sample of 4,344 directorship–firm-year observations from the largest companies in 33 countries in
2013. Director attendance rates are calculated as the number of board and committee meetings the director
attended divided by the number of board and committee meetings the director was eligible to attend during
the year. Shareholder rights is the extent of shareholder rights index (RIGHTS) sourced from the World
Bank’s Doing Business database. Director liability is the extent of director liability (LIABILITY) index
sourced from the World Bank’s Doing Business database. The transportation and telecommunications
infrastructure variables include the number of passengers carried by air transport divided by the total
population as (TRANSPORT) and the number of internet users per 100 people (TELECOM) sourced from
the World Bank’s World Development Indicators. Executive director is a dummy variable equal to one for
executive (inside) directors. Independent director is a dummy variable equal to one for independent non-
executive directors. Female is a dummy variable equal to one for female directors. Board size is the number
of directors on the board. Board independence is the proportion of independent directors on the board.
Table IV. Board females is the proportion of female directors on the board. Meetings is the number of board and
Shareholder rights, committee meetings the director was eligible to attend during the year. Total assets is measured in billions
of US dollars. Return on assets is net income divided by total assets. Debt is total debt divided by total
director liability, assets. Growth is the growth rate of total assets from last year to this year. Data are from Compustat
infrastructure and Global, World Bank and annual reports. Models also include industry fixed effects. Significance is indicated
director attendance at *10%, **5% and ***1%

In the third specification, the coefficient on TRANSPORT of 1.13 (t = 2.98) indicates that
better-quality transportation infrastructure is associated with higher director attendance. In
the fourth specification, the coefficient on TELECOM is 16.57 (t = 6.79), which indicates that
higher-quality telecommunications infrastructure is associated with higher director
attendance. These results are consistent with H3 and H4, and indicate that directors attend
more meetings when there is a lower travel burden and when teleconferencing is a more
viable option.
In the full model, presented in the fifth specification, the results suggest that the country-
level factors most significant in explaining director attendance are RIGHTS and TELECOM.
The coefficient on RIGHTS is 1.07 (t = 2.24). The coefficient on TELECOM is 17.88 (t = 5.70).
Thus, the most relevant policy implications of the analysis in this paper are that director
attendance is higher in countries with stronger shareholder rights and higher-quality Shareholder
telecommunications infrastructure. rights
Results for the director and firm-level variables indicate that director attendance is
higher for executive directors and independent directors, consistent with those of Gray and
Nowland (2018). Director attendance is better on smaller boards and boards with higher
proportions of female directors, consistent with the results of Adams and Ferreira (2009) and
Jiraporn et al. (2009). Also, attendance rates are lower when directors are required to attend
more meetings and when firms have more debt and are growing faster (Adams and Ferreira, 231
2008; Jiraporn et al., 2009; Gray and Nowland, 2018).

Robustness tests
A number of robustness tests are conducted to check the validity of the results and address
endogeneity issues. First, there may be omitted variables, related to both director attendance
and our country-level variables of interest, driving the reported results. In specification one
in Table V, additional country-level variables are added to control for the rule of law, legal
origin and economic conditions. RULE is the rule of law index sourced from the World
Bank’s World Governance Indicators database and controls for the general influence of the
quality of the legal system on director attendance. COMMON is a dummy variable equal to
one for countries that have a common law legal origin and controls for any residual
differences between common and civil law systems. GDPGROWTH is the GDP growth rate
sourced from the World Bank’s Development Indicators database and controls for the
influence of differences in economic conditions across countries on director attendance. The
coefficients on RULE, COMMON and GDPGROWTH are all insignificant and the results
remain consistent.
Second, as disclosure of attendance data is mandatory in some countries and
voluntary in other countries, the sample may have a selection bias, in that only firms

Tobit: Attendance rate (%)

Country-level Attendance Only >50% Only board Only countries >5
variables disclosure attendance attendance firms
Variables (1) (2) (3) (4) (5)

RIGHTS 1.27** (2.19) 1.21** (2.46) 0.88** (2.00) 1.19** (1.92) 0.66 (1.25)
LIABILITY –0.28 (–1.05) –0.11 (–0.37) –0.39 (–1.58) –0.33 (–0.94) –0.10 (–0.36)
TRANSPORT –0.09 (–0.13) –0.51 (–0.93) –0.56 (–1.15) –0.56 (–0.83) –0.66 (–1.19)
TELECOM 17.51*** (3.18) 16.46*** (4.86) 16.08*** (5.59) 25.00*** (6.27) 19.62*** (6.02)
RULE –1.26 (–0.90)
COMMON –0.82 (–0.49)
GDPGROWTH –0.17 (–0.49)
DISCLOSURE –2.91 (–1.18)
Log likelihood –10,142 –10,142 –9,952 –8,806 –9,470
n 4,344 4,344 4,323 4,332 4,028

Notes: Tobit models relate director attendance to shareholder rights, director liability and infrastructure in
a range of robustness tests. Models include all variables as per Table IV, but only the coefficients on the
main variables of interest are reported. RULE is the rule of law index sourced from the World Bank’s World
Governance Indicators database. COMMON is a dummy variable equal to one for countries that have a
common law legal origin. GDPGROWTH is the GDP growth rate sourced from the World Bank’s
Development Indicators. DISCLOSURE is the number of firms (out of 20) in our sample that report director
attendance data. See Table IV for other variable definitions. Data are from Compustat Global, World Bank Table V.
and annual reports. Significance is indicated at *10%, **5% and ***1% Robustness tests
ARJ whose directors have good attendance practices report attendance data in countries
32,2 where reporting is voluntary. To control for this issue, an additional country-level
variable, DISCLOSURE, is added to the model, which equals the number of firms (out of
20) that report director attendance data in each particular country. If voluntary reporting
of only good attendance practices exists, the coefficient on DISCLOSURE is expected to
be negative. In the second specification in Table V, the results indicate that the coefficient
232 on DISCLOSURE is insignificant and the other results remain consistent with those
previously presented[12].
Third, potential outliers are removed and alternative measures of director attendance are
used to validate the results. In the third specification in Table V, the model only includes
observations where director attendance is greater than 50 per cent (n = 4,323). This removes
the possibility that low values of director attendance are driving the results. The reported
coefficients on RIGHTS and TELECOM are significant and consistent with those previously
reported. In the fourth specification, director attendance at board meetings is used instead of
director attendance at board and committee meetings. This removes any bias from
inconsistent reporting of committee meeting attendance. The results remain consistent. In
the fifth specification, only countries with five or more firms reporting director attendance
are retained in the analysis. This not only removes any potential bias from the limited
reporting of attendance data in seven countries, but also substantially reduces the variation
in country-level variables. As a result, the coefficient on RIGHTS becomes insignificant.

Emerging versus developed markets

The results presented so far are average results across both emerging and developed
markets. However, Table I clearly shows that attendance practices differ between emerging
and developed markets, so there is a reasonable chance that the factors influencing director
attendance are different in emerging versus developed markets.
Table VI presents the analysis of director attendance in emerging and developed markets
separately. The first specification shows the results for emerging markets. The attendance of
directors is positively related to shareholder rights (RIGHTS) and telecommunications
infrastructure (TELECOM). The second specification shows the results for developed
markets, where director attendance is positively related to telecommunications infrastructure
(TELECOM), but unrelated to shareholder rights.
For policymakers, these results suggest that improving shareholder rights will only have
a significant effect on director attendance in emerging markets. However, improving the
quality of telecommunications infrastructure has a significant effect on director attendance
practices in all markets.

Conclusion
This paper examines director attendance practices around the world and proposes that
variation in director attendance across countries is due to differences in shareholder rights,
director liability and transportation and telecommunications infrastructure. Using a hand-
collected data set of 4,344 directorships from 33 countries, the results show that director
attendance is positively related to the extent of shareholder rights and the quality of
telecommunications infrastructure across countries.
For policymakers, the analysis in this paper highlights both country-level and firm-level
factors associated with higher director attendance around the world. The results indicate
that director attendance can be improved by enhancing the ability of shareholders to be
involved in corporate decision-making and advancement of telecommunications
infrastructure to make it easier for directors to attend meetings via teleconferencing.
 Tobit: Attendance rate (%)
Shareholder
Emerging markets Developed markets rights
Variables (1) (3)

RIGHTS 1.55** (2.25) –0.29 (–0.38)

LIABILITY –0.18 (–0.47) –0.42 (–1.04)
TRANSPORT –0.80 (–1.08) –1.33 (–1.11)
TELECOM 16.43*** (3.51) 24.43** (2.50) 233
Executive 14.27*** (7.41) 12.35*** (5.19)
Independent 3.47** (2.12) 0.74 (0.38)
Female –1.38 (–0.47) 0.25 (0.12)
Board size –0.12 (–0.67) –0.79*** (–3.30)
Board independence –6.10 (–1.56) 3.70 (0.82)
Board females –1.38 (–0.47) –5.62 (–0.74)
Meetings –0.26*** (–3.58) –0.18** (–2.28)
Ln(Total assets) 0.40 (0.72) –0.79 (–0.91)
ROA 20.18* (1.84) –13.21 (–1.28)
Debt –7.70* (–1.85) –9.88* (–1.79)
Growth –4.05 (–1.04) 8.72 (1.53)
Intercept 95.04*** (14.46) 113.11*** (12.13)
Log likelihood –7,021 –3,077
n 2,875 1,469

Notes: Tobit models relate director attendance to shareholder rights, director liability and infrastructure
using subsamples of directors in emerging and developed markets. See Table IV for variable definitions. Table VI.
Data are from Compustat Global, World Bank and annual reports. Models also include industry fixed Emerging vs
effects. Significance is indicated at *10%, **5% and ***1% developed markets

Improving shareholder rights is particularly important in improving director attendance in

emerging markets. At the firm level, smaller boards and boards that hold fewer meetings are
consistently associated with better director attendance around the world.
This study extends the literature on director attendance by investigating the influence
of country-level factors on director attendance practices. Prior studies have examined
director attendance in a single market, such as the USA, Australia, Taiwan and South
Korea. As this study finds that country-level factors have a significant influence on
director attendance, there is ample room for additional work in this area. Unfortunately,
data limitations currently exist. The first challenge is to encourage more firms in more
markets to disclose the attendance records of their corporate directors. The second
challenge is to create a multi-year data set of director attendance around the world, to
allow for more robust, time-series testing of these relationships. This is a limitation of the
current study that is acknowledged.

Notes
1. www.business-standard.com/article/companies/ india- inc-directors-score-low-on-board-attendance-
112110700067_1.html
2. Unfortunately, the lack of disclosure of director compensation around the world means we do not
have adequate data to test for the relation between director compensation and attendance in this
paper.
3. https://aicd.companydirectors.com.au / -/media/cd2/resources/director-resources/director-tools/pdf/
05446-4-5-director-t-me-directors-meetings_a4_web.ashx
ARJ 4. This was the most recent year available when data collection started. Because of the difficulty of
32,2 data collection, only one year of data were collected.
5. We only select companies that are locally listed and report in their local currency to ensure they
are subject to the local legal environment.
6. These three countries are Norway, Sweden and Taiwan.
234 7. Because of the difficulty of data collection, only the top 20 firms in each country were selected.
8. Not all companies report the correct number of meetings the director was eligible to attend
during the year. For example, a director may have joined the company mid-year but is reported
as attending 5 out of 10 board meetings. We do not know exactly how many board meetings were
held during the director’s tenure during the year, so this director is removed from the sample.
9. In some countries, such as Germany, attendance is reported at the board level and not the
individual director level.
10. Return on assets, debt and growth are winsorized at the 1st and 99th percentiles.
11. We use air travel as our proxy for transportation infrastructure for two reasons. First, we believe
that corporate directors that are required to travel some distance are more likely to travel by air
to meetings. Second, there are more country-level data available for air travel than other forms of
travel from World Bank databases.
12. In unreported testing, the country-level transparency index from the World Bank’s Doing
Business database is used instead of DISCLOSURE in the model, with consistent results.

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Corresponding author
John Nowland can be contacted at: jenowla@ilstu.edu

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