Are Busy Boards Effective Monitors?

Posted: 30 Mar 2005

See all articles by Eliezer M. Fich

Eliezer M. Fich

Drexel University - Department of Finance

Anil Shivdasani

University of North Carolina Kenan-Flagler Business School

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Firms with busy boards, those in which a majority of outside directors hold three or more directorships, are associated with weak corporate governance. These firms exhibit lower market-to-book ratios, weaker profitability, and lower sensitivity of CEO turnover to firm performance. Independent but busy boards display CEO turnover-performance sensitivities indistinguishable from those of inside-dominated boards. Departures of busy outside directors generate positive abnormal returns. When directors become busy as a result of acquiring an additional directorship, other companies in which they hold board seats experience negative abnormal returns. Busy outside directors are more likely to depart boards following poor performance.

Keywords: Directorships, Board of directors, Corporate governance, Firm performance

JEL Classification: G30, G39, K22

Suggested Citation

Fich, Eliezer M. and Shivdasani, Anil, Are Busy Boards Effective Monitors?. Available at SSRN:

Eliezer M. Fich (Contact Author)

Drexel University - Department of Finance ( email )

LeBow College of Business
3220 Market Street – 11th Floor
Philadelphia, PA 19104
(215) 895-2304 (Phone)

HOME PAGE: http://

Anil Shivdasani

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
919-962-3182 (Phone)
919-962-2068 (Fax)

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