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

Mans-Kemp, Nadia; Viviers, Suzette; Collins, S.J. David J.

doi:10.1057/s41310-018-0048-9

Cited by 19 publications

(13 citation statements)

References 38 publications

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“…Poor board attendance by these directors can translate into less contribution to a firm’s board activities. On the other hand, multiple directorships can offer valuable access to professional networks and resources (Mans-Kemp, Viviers, & Collins, 2018). Cashman, Gilan, and Jun (2012) disagree on the association of the so-called multiple directorships and firm performance.…”

Section: Introductionmentioning

confidence: 99%

Effect of Board Diversity, Promoter’s Presence and Multiple Directorships on Firm Performance

Limbasiya

Shukla

2019

Indian Journal of Corporate Governance

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Purpose: This article analyses the effect of board diversity on the financial performance of non-financial firms listed in the Nifty Index. Specifically, it examines the mediation effect of the promoter’s presence and multiple directorships on the financial performance of the firm, that is, return on net worth (RONW), return on equity (ROE) and its sales growth. Methodology: The article uses the hierarchical regression model to analyse the effect of board diversity on financial performance. The presence of the promoters on the board and multiple directorships are taken as the control variables. Findings: Empirical results show the significant effect of the promoter’s presence on the board on the firm’s earnings and a significant positive effect of firm age, board size, age diversity and experience diversity on the financial performance. However, we do not find any statistically significant relationship between firm size and financial performance in any model. The results also show that the age and experience of the female directors are significantly less compared to the male directors. However, the age and experience of the non-executive directors and independent directors are found to be higher among the other positions held by the directors. We also find a negative relationship between multiple directorships in other firms and the financial performance of the firm. Value: The article proposes that there should be a greater number of independent directors in a firm that has its promoter on the board. One recommendation for the board is to reduce the number of directorships held in other boards to ensure more constructive contribution towards the firm’s financial performance. The article studies the effect of the promoter’s presence on the board and multiple directorships held by board members on the financial performance of the firm.

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Section: Introductionmentioning

confidence: 99%

Effect of Board Diversity, Promoter’s Presence and Multiple Directorships on Firm Performance

Limbasiya

Shukla

2019

Indian Journal of Corporate Governance

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“…Diverse directors often receive multiple invitations to serve on several boards concurrently. Some researchers hence caution companies to consider the positive and negative implications of potential director "overboardedness" (Ferris, Jayaraman, and Liao 2020;Handschumacher et al 2019;Mans-Kemp, Viviers, and Collins 2018). A director becomes overboarded if he/she serves on too many boards simultaneously (Ferris et al 2020).…”

Section: Director Independence and Diversity Considerationsmentioning

confidence: 99%

“…They furthermore cautioned that multiple board positions might result in a conflict of interest. Researchers urge nomination committees to account for the potential contribution and challenges related to a busy schedule when appointing an overboarded individual to a board (Ferris et al 2020;Handschumacher et al 2019;Mans-Kemp et al 2018). Directors might risk compromising their independence by taking on more board positions (Sharma 2011).…”

Section: Board Diversity and Overboardednessmentioning

confidence: 99%

Reflecting on Corporate Governance in South Africa: Lessons Learned and the Way Forward

Zyl

Mans-Kemp

2020

SABR

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Background: South Africa is a corporate governance pioneer. The King Reports have offered guidance to listed companies in the country since 1994 and unlisted entities since 2016. In the drive for corporate change, attention is increasingly placed on the role of activist shareholders, in particular institutional investors, given the size of their investments. Purpose/objectives: This study aimed to gauge institutional investors’ views on the differences between the King III and IV Reports related to positive aspects and room for improvement. Design/methodology/approach: Semi-structured interviews were conducted with selected institutional investors. Themes were then derived by conducting an interpretive thematic analysis. Findings: Interviewees commended the format and scope of the latest King Report but suggested that outcomes-based training should be offered to directors to ease implementation. Executive remuneration, director independence and auditor independence were highlighted as areas that require attention. Some interviewees questioned whether the current non-binding vote on executive remuneration is sufficient. They suggested that executive remuneration should be tied to performance outcomes across the triple bottom line. Participants recommended that director independence should be considered on a case-by-case basis, instead of strictly applying King IV’s suggested tenure guideline. Furthermore, mandatory audit firm rotation could enhance auditor independence, and hence transparency. Stakeholders are encouraged to demand enhanced transparency on corporate matters to enable more informed decision-making.

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“…Much of the research into multiple directorships (MDS) concerns itself with ‘how’ busy multiple directors may be (Ferris et al , 2003; Fich and Shivdasani, 2006; Jiraporn et al , 2009; Field et al , 2013; Lei and Deng, 2014; Rouyer, 2016; Huebner, 2018; Kress, 2018; Mans‐Kemp et al , 2018). The argument is that multiple directors may be less effective governing board members because they are overly‐occupied with their other board obligations (Adams et al , 2010).…”

Section: Introductionmentioning

confidence: 99%

Does prestigious board membership matter? Evidence from New Zealand

Jahan

Lubberink

Peursem

2020

Accounting & Finance

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This study investigates whether ‘prestigious’ multiple board membership is positively associated with firm performance. We employ Resource Dependency theory to explain why performance outcomes may be improved by the presence of ‘prestigious’ multiple directorships. Our analysis relies on extensive hand‐collected data on New Zealand company directorships. The results support the contention that ‘prestigious’ multiple directorships are related to better accounting and market performance. Conclusions reflect upon how Resource Dependency theory informs this phenomenon and how ‘prestigious’ board members may be a valuable resource for firms. We also reveal how these findings expose a new avenue for board governance research.

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

Cited by 19 publications

References 38 publications

Effect of Board Diversity, Promoter’s Presence and Multiple Directorships on Firm Performance

Effect of Board Diversity, Promoter’s Presence and Multiple Directorships on Firm Performance

Reflecting on Corporate Governance in South Africa: Lessons Learned and the Way Forward

Does prestigious board membership matter? Evidence from New Zealand

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