Board Busyness and Firm Productivity

Bazrafshan, A., and Hesarzadeh, R. 2021. Personnel Review, doi: 10.1108/PR-07-2019-0375

Posted: 19 Apr 2021

See all articles by Ameneh Bazrafshan

Ameneh Bazrafshan

Imam Reza International University

Reza Hesarzadeh

Ferdowsi University of Mashhad

Date Written: April 5, 2021

Abstract

Purpose — Prior studies provide mixed evidence on the association of board busyness and firm productivity. Thus, this paper empirically analyzes how board busyness affects firm productivity.

Design/methodology/approach — To measure board busyness, this paper computes the percentage of directors on a board who sit on three or more boards. Further, to calculate firm productivity, the paper employs data envelopment analysis.

Findings — Findings demonstrate that the association of board busyness and firm productivity (association) is generally negative and statistically significant but economically insignificant. In this respect, the findings reveal that the association is negative (positive) and both statistically and economically significant for firms having higher monitoring (advising) needs. Moreover, the findings demonstrate that regulatory oversight (1) weakens the general negative association; (2) changes the direction of association from negative to positive, for firms having higher monitoring needs; and (3) does not influence the association, for firms having higher advising needs.

Originality/value — Taken together, the findings indicate that the association of board busyness and firm productivity is conditional to monitoring/advising needs and regulatory oversight. As such, the findings enrich the current debates on the association. Furthermore, the findings offer novel perspectives to enrich the regulatory frameworks of countries which are constraining multiple directorships.

Keywords: boards of directors, busyness, productivity, agency conflicts, busyness hypothesis, emerging capital market

Suggested Citation

Bazrafshan, Ameneh and Hesarzadeh, Reza, Board Busyness and Firm Productivity (April 5, 2021). Bazrafshan, A., and Hesarzadeh, R. 2021. Personnel Review, doi: 10.1108/PR-07-2019-0375, Available at SSRN: https://ssrn.com/abstract=3819529

Ameneh Bazrafshan

Imam Reza International University ( email )

Felestin Square, Mashhad, 91735553 Iran
Mashhad, 91735553
Iran

Reza Hesarzadeh (Contact Author)

Ferdowsi University of Mashhad ( email )

Mashhad, 9177948974
Iran

HOME PAGE: http://Hesarzadeh.profcms.um.ac.ir/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
123
PlumX Metrics