Firm Size and the Effectiveness of Busy Boards in An Emerging Economy

37 Pages Posted: 15 Apr 2022

See all articles by Sugato Chakravarty

Sugato Chakravarty

Krannert School of Management

Prasad Hegde

Auckland University of Technology; Auckland Center for Financial Research(ACFR)

Date Written: May 31, 2015

Abstract

This paper examines the role of multiple corporate board directorships on performance over a large sample of Indian firms. India is an emerging economy with significant institutional voids. In such a space, firms must be especially creative in how they employ certain resources to maximize firm performance. We show that the relationship between firm performance and board busyness is positive and highly significant but only among small firms. For large firms, however, there exists no significant relationship between performance and board busyness at standard levels of significance. Furthermore, controlling for specific firms in our data that start of as small at the beginning of our sample period and grow to be large towards the end of the sample period, we see a positive and significant relationship between board busyness and firm performance when the firms are small. This relationship dissipates when the same firms grow to be large. The above findings survive multiple estimation approaches and are robust to alternative measures of board busyness and firm performance.

Keywords: Indian Corporate Governance, Busy boards, Firm performance, Firm Size, Reputational Capital, Intuitional Voids

JEL Classification: G3

Suggested Citation

Chakravarty, Sugato and Hegde, Prasad, Firm Size and the Effectiveness of Busy Boards in An Emerging Economy (May 31, 2015). Global Finance Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4053410

Sugato Chakravarty (Contact Author)

Krannert School of Management ( email )

Purdue University
403 West State Street
West Lafayette, IN 47907
United States
765-494-6427 (Phone)

HOME PAGE: http://https://www.krannert.purdue.edu/directory/bio.php?username=sugato

Prasad Hegde

Auckland University of Technology ( email )

42 Wakefield Street
WF810
Auckland Central, 1010
New Zealand

HOME PAGE: http://https://academics.aut.ac.nz/prasad.hegde

Auckland Center for Financial Research(ACFR) ( email )

42 Wakefield Street
WF810
Auckland Central, 1010

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