Better directors or distracted directors? An international analysis of busy boards |
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Institution: | 1. University of Colorado Colorado Springs, 1420 Austin Bluffs Pkwy, Colorado Springs, CO 80918, USA;2. Georgia Institute of Technology, Scheller College of Business, 800 West Peachtree Street NW, Atlanta, GA 30332, USA;3. Illinois State University, 420 State Farm Hall of Business, Normal, IL 61790, USA |
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Abstract: | This study examines the effect of busy directors and boards on the value of a set of non-U.S. firms from 1999 to 2012. We find that busy directors and boards are a global phenomenon, but that national culture helps to explain the cross-sectional variation in director and board busyness. Firms with busy boards exhibit lower market-to-book ratios and reduced profitability, but this effect is reversed for younger firms. We conclude that the advising ability of these networked directors is most useful for younger firms. A demographic analysis shows that multiple directorships are positively associated with firm performance and education, but negatively associated with female directors. |
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