Do Busy Boards Add Value to Standalone Firms Relative to Business Groups? Evidence from India

32 Pages Posted: 13 Mar 2011

See all articles by Sugato Chakravarty

Sugato Chakravarty

Purdue University

Vijaya B. Marisetty

RMIT University; Financial Research Network (FIRN)

Madhu Veeraraghavan

T.A. PAI Management Institute, Finance Area

Date Written: March 10, 2011

Abstract

We investigate whether busy boards add more value to standalone firms compared to business group affiliated firms in India – an economy plagued with significant institutional voids. Using board composition data of the top 500 Indian firms spanning the period 2003 to 2006, we find that firm performance improves when its board changes from being a board with non-busy outside directors to a board with busy outside directors. Furthermore, directors’ qualifications and experience determine their directorships and degree of busyness. We also find that firms affiliated with business groups exhibit a negative relationship to the number of busy outside directors.

Suggested Citation

Chakravarty, Sugato and Marisetty, Vijaya B. and Veeraraghavan, Madhu, Do Busy Boards Add Value to Standalone Firms Relative to Business Groups? Evidence from India (March 10, 2011). Available at SSRN: https://ssrn.com/abstract=1783030 or http://dx.doi.org/10.2139/ssrn.1783030

Sugato Chakravarty

Purdue University ( email )

Consumer Sciences
1262 Matthews Hall Rm 214F
West Lafayette, IN 47906
United States
765-494-6427 (Phone)
765-494-0869 (Fax)

HOME PAGE: http://web.ics.purdue.edu/~sugato

Vijaya B. Marisetty

RMIT University ( email )

Business
Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Madhu Veeraraghavan (Contact Author)

T.A. PAI Management Institute, Finance Area ( email )

Bangalore
Manipal, Karnataka 576104
India
+91-820-2701030 (Phone)

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