To What Extent Did Independent Directors Help Firms’ Recovery during the COVID-19 Pandemic? Evidence from China

To what extent did independent directors help firms’ recovery during the COVID-19 pandemic? In this paper, we answer this question by investigating whether independent directors contribute to Chinese listed firms’ operation income growth during the first and second quarters of the year 2020. By employing a triple difference-in-differences (DDD) estimation strategy, we show that firms located in more pandemic-affected regions experienced a more pronounced operating recovery if they receive more independent directors’ opinions and have fewer female and busy directors. The possible reason is that those female and busy directors were likely to be distracted during the pandemic outbreak. We also provide evidence that firms paying higher remunerations to independent directors tend to recover quicker. Moreover, independent directors’ age and education level positively contribute to firms’ recovery. Our work is among the first to study independent directors’ role in shaping firms’ operation performance under the COVID-19.