Is Busy Really Busy? Board Governance Revisited

Andrés, Christian; Lehmann, Mirco

doi:10.2139/ssrn.1364511

Cited by 13 publications

(20 citation statements)

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“…Reference was also made to the monetary benefits associated with holding multiple board positions, as one participant remarked: ''Some people take as many [directorships] as you offer them because of the money''. This view concurs with Andres et al (2013) who found that substantial monetary benefits encourage directors to accept several board positions. In addition, the local media has focused on the controversial topic of excessive executive compensation as it has been revealed that executives earned almost 500 times more than the average South African employee (Lu and Melin 2016).…”

Section: Possible Causes Of Overboardednesssupporting

confidence: 84%

“…The relationship between corporate governance and the social networks of 1600 directors of selected listed German companies between 2003 and 2006 was examined by Andres et al (2013). These authors found that companies with well-connected directors experienced lower marketbased financial performance (as measured by Tobin's Q) and paid their executives a higher salary than companies with fewer interlocked directors.…”

Section: The Busyness Hypothesismentioning

confidence: 99%

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Exploring the causes and consequences of director overboardedness in an emerging market

2018

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Scholars and shareholder activists have raised concerns about directors serving on multiple boards simultaneously. Semi-structured interviews were conducted with 10 experienced diverse South African directors to investigate the causes and consequences of overboardedness. Interviewees identified the limited talent pool and board diversity targets as the main causes of overboardedness (or interlocking as it is also called). In line with the busyness hypothesis, poor meeting attendance by overboarded directors was highlighted by some participants. However, others claimed that director interlocking could offer invaluable access to social networks and resources, lending support to the experience hypothesis. Director busyness should hence be considered on a case-by-case basis.

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Section: Possible Causes Of Overboardednesssupporting

confidence: 84%

Section: The Busyness Hypothesismentioning

confidence: 99%

Exploring the causes and consequences of director overboardedness in an emerging market

2018

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“…For instance, Villalonga and Amit (2006) argue that agency conflicts are costlier for firms that are owned or controlled by family groups. Andres, Bongard, and Lehmann (2013) demonstrate that firm value decreases when family groups impose control over management and directors. In addition, Shleifer and Vishny (1997), Anderson and Reeb (2003), and Maury (2006) reveal that in countries in which shareholder protection and transparency are weak, the potential for expropriation by family controllers may erode value for minority shareholders.…”

Section: Family Ownershipmentioning

confidence: 94%

Multiple directorships, family ownership and the board nomination committee: International evidence from the GCC

Eulaiwi

Al‐Hadi

Taylor

et al. 2016

Emerging Markets Review

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In this paper, we investigate the association between outside board directorships and family ownership concentration. Using a sample of 1091 firm-year observations of non-financial publicly listed firms from Gulf Cooperation Countries (GCC) during the 2005 to 2013 period, we find a positive association between family ownership and the number of outside directorships held by board members. This finding is consistent with the notion that family ownership reduces a board's monitoring capabilities. We also test whether the recent corporate governance reforms in GCC, which were designed to protect investors and minority shareholders, affect firms' incentives to establish a board nomination committee (NC). We find the existence of a board NC and the quality and characteristics of NC membership act to suppress the positive association between outside directorships and family ownership. Our results are robust to the use of alternative measures of outside directorships and family ownership and models that test for endogeneity. Overall, our results suggest that the institutional specificities of emerging economies such as those in the GCC can sustain high levels of multiple directorships, which could impair the quality of corporate governance.

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“…Nevertheless, the quality of directors with multiple appointments can be compromised if the number of directorships is too high, and the literature associates firms that have busy directors with weak corporate governance. There is an ongoing debate about both the effect of multiple directorships on firm outcomes and the concept of busy directors (Andres et al,). Serving on many boards can diminish directors' dedication and negatively affect the corporate decisions (Lei and Deng, ; Lopez and Morros, ).…”

Section: Previous Literaturementioning

confidence: 99%

The effect of board of directors on R&D intensity: board tenure and multiple directorships

Bravo

Alvarado

2017

R & D Management

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Taking a combination between agency theory and resource dependence theory, we point out that directors' capital may have an effect on R&D strategies. A sample of both high‐tech and low‐tech industries for the period 2007–2011 is used. The results indicate that, regardless of the type of industry and the specific expertise on R&D intensive companies, board members with multiple directorships influence R&D corporate strategies. The resources acquired by directors through their experience and connections positively influence R&D intensity, but only if directors can carry out their monitoring activity adequately. This evidence implies a step forward in the understanding of the role of board of directors in corporate strategy, thus having significant implications for academics, companies and regulators, which are both theoretical and practical.

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Is Busy Really Busy? Board Governance Revisited

Cited by 13 publications

References 0 publications

Exploring the causes and consequences of director overboardedness in an emerging market

Exploring the causes and consequences of director overboardedness in an emerging market

Multiple directorships, family ownership and the board nomination committee: International evidence from the GCC

The effect of board of directors on R&D intensity: board tenure and multiple directorships

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