Knowledge@ASB: Boardroom Positions Vacant: What's the Real Cost of Appointing a Foreign Director?

When a foreign independent director is on the board the results may be weaker governance and higher costs – because missed meetings and an offshore director's inability to observe management and glean crucial information have a tangible impact. Companies with foreign directors are more likely to misreport their financial positions and overpay their chief executives, according to research by Ron Masulis, a professor at the Australian School of Business. So, when considering candidates for that next board vacancy, perhaps the emphasis should be less on who you know and more about where they're based.