An International Study of the Value Implications of CEO External-Directorships

Journal of Accounting and Finance, Forthcoming

31 Pages Posted: 15 Jan 2019

See all articles by Jesus M. Salas

Jesus M. Salas

Lehigh University

Andrey Zagorchev

Rhodes College - Department of Business

Date Written: January 13, 2019

Abstract

We study the effect of CEO external-directorships on performance using non-US firms. We find that CEOs serving on four or more external-directorships have a detrimental effect on firm value and performance and more powerful CEOs are busier. Firms with busy CEOs trade at a 10% discount relative to the mean and their ROA suffer 28% relative to the mean, suggesting economic significance. Our results are robust to matching and instrumental variable regressions that control for endogeneity. The evidence suggests that shareholders in countries with poor democracy, higher bureaucracy, and higher corruption should find ways to discourage excessive external-directorships of CEOs.

Keywords: Busy CEOs, Corporate Governance, International Corporate Governance, Firm Value, Performance

JEL Classification: G10, G15, G32, M41

Suggested Citation

Salas, Jesus M. and Zagorchev, Andrey, An International Study of the Value Implications of CEO External-Directorships (January 13, 2019). Journal of Accounting and Finance, Forthcoming . Available at SSRN: https://ssrn.com/abstract=3314972 or http://dx.doi.org/10.2139/ssrn.3314972

Jesus M. Salas (Contact Author)

Lehigh University ( email )

Bethlehem, PA 18015
United States
610-758-3238 (Phone)

HOME PAGE: http://www3.lehigh.edu/business/faculty/salas.asp

Andrey Zagorchev

Rhodes College - Department of Business ( email )

United States

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