Aren’t All Directors Busy? Evidence from Director Workload and Attendance

Abstract

All directors, not only those with multiple directorships, are potentially too busy to fulfill their directorial duties. Thus, as a general test of director busyness, we examine how changes in workloads (board and committee meeting frequency) affect the attendance practices of CEOs and directors. We find that attendance rates for both outside and inside directors decrease (non-random absences increase) when they are required to attend more board meetings. The marginal effect is that the average outside (inside) director has a 14 percent (12 percent) likelihood of missing an additional board meeting. Further analysis shows that this negative relationship between board meetings and attendance rates is consistent across directorships in a range of firms, including when more meetings are associated with poor performance, M&A activity and CEO turnover. The results for committee meetings are mixed, highlighting that director attendance is not consistent across different types of meetings. In summary, our analysis indicates that the average director is busy and has a limited ability to attend additional board meetings. Thus, any benefits firms obtain from holding additional meetings are being eroded by lower director attendance.

Keywords: attendance, board of directors, busy directors, CEOs, meeting frequency, workload