Seeing is believing: Do face-to-face meetings between independent directors and investors enhance corporate ESG performance?

Abstract

This article explores the topic of whether face-to-face communication between independent directors and investors can help them obtain firm-specific information and promote management to improve corporate environmental, social, and governance (ESG) performance. Our findings revealed a notable positive correlation between the frequency of independent directors attending shareholder meetings (IDASM) and ESG performance. The underlying mechanism for this correlation is that IDASM increases investment in research and development (R&D) and green patent applications, which can drive long-term firm value. Further analysis reveals that independent directors attending annual shareholder meetings can more effectively enhance a company's ESG performance. Independent directors attending shareholder meetings also exhibits a more noticeable impact on improving corporate governance performance than environment performance and social performance. The effect becomes more pronounced when independent directors possess an accounting background, have shorter tenures, when the meetings attended by more minority shareholders, the degree of enterprise information asymmetry is high. The research results have reference significance for improve the information disadvantage position of independent directors, restrain short-sighted behavior of management, and improving the role of shareholder meetings in protecting investor interests.