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Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments

Posted: 18 Jun 2002  

Adam C. Pritchard

University of Michigan Law School

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Murali Jagannathan

State University of New York (SUNY) at Binghamton

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Abstract

We examine the number of external appointments held by corporate directors. Directors who serve larger firms and sit on larger boards are more likely to attract additional directorships. Consistent with Fama and Jensen (1983), we find that firm performance has a positive effect on the number of appointments held by a director. We find no evidence that multiple directors shirk their responsibilities to serve on board committees. We also do not find that multiple directors are associated with a greater likelihood of securities fraud litigation. We conclude that the evidence does not support calls for limits on directorships held by an individual.

JEL Classification: G34, K22

Suggested Citation

Pritchard, Adam C. and Ferris, Stephen P. and Jagannathan, Murali, Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments. Journal of Finance, Vol. 58, p. 1087, 2003. Available at SSRN: https://ssrn.com/abstract=316519

Adam C. Pritchard (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4048 (Phone)
734-647-7349 (Fax)

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)

Murali Jagannathan

State University of New York (SUNY) at Binghamton ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States
607-777-4639 (Phone)

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