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Are Busy Boards Detrimental?Laura Casares FieldPennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration Michelle LowryPennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration Anahit MkrtchyanPennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration November 20, 2012 Abstract: Busy directors have been widely criticized as being ineffective. However, we hypothesize that busy directors offer advantages for many firms. While busy directors may be less effective monitors, their experience and contacts arguably make them excellent advisors. Among IPO firms, which have minimal experience with public markets and likely rely heavily on their directors for advising, we find busy boards to be common and to contribute positively to firm value. Moreover, these positive effects of busy boards extend to all but the most established firms. Benefits are lowest among Forbes 500 firms, which likely require more monitoring than advising.
Number of Pages in PDF File: 55 Keywords: Corporate governance, IPO, Board of directors, venture capital JEL Classification: G24, G34, K22 working papers seriesDate posted: July 25, 2011 ; Last revised: November 20, 2012Suggested CitationContact Information
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