A New Perspective on Director Busyness

Abstract

We provide a new perspective to the multiple directorships literature, which focuses on outside directors. Inside directors, however, are important in both the boardroom and day-to-day operations of the firm. We find that any negative effect of director busyness is more pervasive for inside directors than for outside directors. Additional analysis reveals that bidding firms' acquisition announcement returns are decreasing in inside director board appointments, but there is no such effect for outside directors. These results highlight the importance of inside directors and demonstrate that firm performance can be compromised when they sit on multiple boards.

Firm Efficiency of East Asia Countries: The Impact of Board Busyness

“…Collectively, in all selected East Asia countries, the busy boards are inclined to devote insufficient time and attention to their monitoring role that could in turn lead to lower firm efficiency. These findings are then corresponding to previous study on the detrimental effect of board busyness in a single country context (e.g., the USA and Taiwan), including Fich and Shivdasani (2006), Cashman et al (2012), Lin et al (2014) and Liu and Paul (2015).…”

“…Yet, another group of scholars have revealed the detrimental effect of board busyness on firms (Cashman et al, 2012; Fich & Shivdasani, 2006; Lin, Yeh, & Yang, 2014; Liu & Paul, 2015). With the underlying principles of agency theory and busyness hypothesis, multiple directorships increase the time required on the director.…”

Institutional Monitoring: Evidence from the F‐Score

“…We also include BUSY IND PCT, the percentage of independent directors holding three or more board seats. Directors with many board seats may signal either better quality or over-commitment (e.g., Ferris et al, 2003;Fich and Shivdasani, 2006;Field et al, 2013;Liu and Paul, 2015). Finally, we follow Chen et al (2007) and include the industry-adjusted Tobin's Q (TOBIN Q) to control for the firm's growth opportunities.…”

The Effect of Family Involvement on Innovation Outcomes: The Moderating Role of Board Social Capital

“…The results remain fully robust. Third, as executive directors can be busy with their internal, day‐to‐day tasks, and are, therefore, potentially less important for external knowledge sourcing (Blanco‐Alcántara, Díez‐Esteban, and Romero‐Merino, 2019; Liu and Paul, 2015), we excluded them from our external board social capital estimations and reestimated our main models. Our results are again fully robust.…”