Better Directors or Distracted Directors? An International Analysis of Busy Boards
65 Pages
Posted: 14 Aug 2017
University of Missouri at Columbia - Department of Finance
Georgia Institute of Technology - Scheller College of Business
Illinois State University - Department of Finance, Insurance and Law
Date Written: August 2, 2017
Abstract
This study examines the effect of busy directors and boards on the value of a set of international firms from 1999-2012. We find that busy directors and boards are a global phenomenon. We discover that national culture helps to explain the cross-sectional variation in director and board busyness. We determine that firms with busy boards exhibit lower market-to-book ratios and reduced profitability. This effect, however, is reversed for younger firms. We conclude that the advising ability of these networked directors is useful for younger firms. A demographic analysis shows that multiple directorships are positively associated with firm performance and education, but negatively associated with female directors.
Keywords: Directors; Busy Boards; Governance; Culture
JEL Classification: G3; G34
Suggested Citation:
Suggested Citation
Ferris, Stephen P. and Jayaraman, Narayanan and Liao, Min-Yu (Stella), Better Directors or Distracted Directors? An International Analysis of Busy Boards (August 2, 2017). Georgia Tech Scheller College of Business Research Paper No. 17-30. Available at SSRN: https://ssrn.com/abstract=3012820
