Small Firm CEOs and Outside Directorships: Tenure, Demonstration and Synergy Effects

Abstract

We investigate the determinants of the number of outside directorships held by chief executive officers (CEOs) of small, unquoted companies. CEOs of growth-oriented firms hold more outside directorships, as do CEOs of more complex firms. This reflects the need to acquire external resources and develop internal human capital. Synergy effects were also evident in particular industries. On balance there was little evidence of perquisite consumption and some evidence that boards do have a disciplining role.