Director Attendance at Board Meetings and Executive Compensation Evidence From Malaysia

This chapter attempts to examine the effect of directors' attendance at meetings on the board's effectiveness in mitigating executive expropriation practices, especially excessive compensation. For this end, the authors employ a multiple regression model within a sample of Malaysian firms over the period 2008-2013. The results show that the attendance of directors at board meetings affects the executive compensation negatively. Board members who attended meetings frequently are more able to monitor managers' practices continuously and effectively. Hence, they can diminish the possibility of expropriation and decrease the excessive pay. The findings also show that increasing board meetings frequency and strengthening nominating and compensation committees' independence reinforce the board's monitoring effectiveness in reducing executive expropriation behavior.