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Better Directors or Distracted Directors? An International Analysis of Busy Boards

65 Pages Posted: 14 Aug 2017  

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Narayanan Jayaraman

Georgia Institute of Technology - Scheller College of Business

Min-Yu (Stella) Liao

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

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

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance ( email )

214 Middlebush Hall
Columbia, MO 65211
United States
573-882-6272 (Phone)
573-884-6296 (Fax)

Narayanan Jayaraman

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States
404-894-4389 (Phone)
404-894-6030 (Fax)

Min-Yu (Stella) Liao (Contact Author)

Illinois State University - Department of Finance, Insurance and Law ( email )

Normal, IL 61790
United States

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