Are Busy Directors Good for Business

25 Pages Posted: 19 Mar 2012

See all articles by Richard A. Heaney

Richard A. Heaney

University of Western Australia

Lary Li

RMIT University - School of Economics, Finance and Marketing; Financial Research Network (FIRN)

Monica Tan

RMIT University; Financial Research Network (FIRN)

Date Written: March 19, 2012

Abstract

This paper draws on the top 100 firms in Australia, sampled every three years from 1990 through to 2008, to analyse the impact of busy directors on large Australian companies. Information on directors, CEO and Chairperson along with shareholder information is hand collected from the annual reports of largest 100 companies. We focus on director and CEO outside engagements using a count of outsider directorships, outside CEO positions, outside chairperson positions and industry/professional memberships rather than just focusing on a count of outside directorships. Using fixed effects panel data analysis we find that firm performance is decreasing in size and leverage over the study period. Board busyness is found to be increasing in firm size and leverage and decreasing in CEO tenure relative to chairperson tenure. CEO busyness is found to be increasing in size, chair busyness and CEO tenure relative to chair tenure and decreasing in CEO duality and CEO tenure relative to chairperson tenure. An important contribution to the literature is the finding of variation in the results for outside engagements in private firms compared with outside engagements in public firms. We also note important differences in the determinants of CEO busyness relative to the determinants of board busyness.

Keywords: busy boards, busy directors, busy CEOs

Suggested Citation

Heaney, Richard A. and Li, Larry and Tan, Monica, Are Busy Directors Good for Business (March 19, 2012). 2012 Financial Markets & Corporate Governance Conference, Available at SSRN: https://ssrn.com/abstract=2025890 or http://dx.doi.org/10.2139/ssrn.2025890

Richard A. Heaney (Contact Author)

University of Western Australia ( email )

Crawley
Perth, Western Australia 6009
Australia
0414700799 (Phone)

Larry Li

RMIT University - School of Economics, Finance and Marketing ( 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

Monica Tan

RMIT University ( email )

35 Herlihys Rd
Templestowe Lower, 3107
Australia
403388233 (Phone)

Financial Research Network (FIRN)

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

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

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