How much do the roles of outside directors’ matter?

Despite the increasing emphasis on outside directors‟ monitoring role in agency theory, they often face the criticism of „rubber stamping‟. According to role-based explanations, this is a result of the lower survival chance of outside directors who assume monitoring roles, compared to advisory ones. This study extends the literature by pitting outside directors‟ behavior against their role, and argues that their behavioral characteristics, i.e., proactive versus cooperative, affect their survival chance on the board, regardless of their monitoring or advisory roles. This study further suggests that those who proactively perform their roles improve firm performance when they survive on the board, and thus investigates the mechanisms for their survival chance. Analyzing the survey and secondary data on 157 outside directors in Korean firms, this study finds that outside directors have lower survival chance when they proactively perform their roles regardless of monitoring or advisory ones. However, when they survive, their proactive behavior increases Tobin‟s q. To mitigate the lower survival chance for proactively behaving outside directors, this study suggests power, such as foreign ownership (for firms with higher growth opportunity), and valuable resources, such as elite MBA degrees (for firms with lower growth opportunity).