Investigating the extent and impact of director overboardedness using a comprehensive measure

Abstract

Purpose Directors can become overextended when they serve on multiple boards simultaneously. Previous scholars mostly considered directorships held at listed companies. This study aims to investigate the extent and impact of director overboardedness in an emerging market by using a comprehensive measure. Design/methodology/approach The analysis covered 1,600 directors who served on the boards of the 100 largest companies listed in South Africa over the period 2011–2016. In addition to directorships held at listed companies, board positions at unlisted companies and other entities such as state-owned enterprises were considered. Board committee memberships at the sample companies were furthermore included. Random effects ANOVA was conducted to test for significant differences in board and committee meeting attendance. Findings Two-thirds of the considered directors were overboarded when accounting for all their positions. Board committee memberships increased notably over the research period. There was no significant difference in the percentage of board meetings attended between overboarded and non-overboarded directors. However, those directors who held three or more positions simultaneously attended significantly more board committee meetings than their counterparts who held fewer positions. Of the considered committees, the remuneration committee typically had the highest proportion of overboarded directors. Originality/value Eligible board candidates are in high demand given the limited talent pool in South Africa. The findings contradict the busyness hypothesis and suggest that director overboardedness should be evaluated on a case-by-case basis.

Do Board Multiple Directorships and ESG Score Drive Firm Value? Study of Non-Financial Companies in Thailand

“…Researchers has employed various terminologies in referring multiple directorships according to extant literatures, such as busy boards [21], [16], multiple directorships [44], multiplicity of directorship [34] and over-boardedness [35] with busy directors as a popular term. In this paper, all terminologies are used interchangeably.…”

“…In this paper, all terminologies are used interchangeably. Board multiple directorships refers to board in which its director(s) holds multiple boards seats concurrently [21], [35]. A director is busy when they hold three or more directorship positions in other companies [21], [53], [29].…”

“…Additionally, a director who holds many positions in various companies will help the director paint a favourable reputation for them and the company they are representing. Moreover, directors with multiple external positions attend more board meetings [35].…”

Recasting trust and distrust in the boardroom

“…Our study provides a message to policymakers and governance practitioners, especially those located in the global South, that current CG specifications and processes may be under-emphasising how the effectiveness of boards may be enhanced by incorporating the nature of the relationships between key board actors as opposed to mimicking structural mechanisms that dominate CG literature and practices from the global North. Embracing relational aspects of CG may ameliorate the shortage of board skills and experience in emerging market contexts, a view advance by Mans-Kemp et al (2020).…”

Fuzzy bundling of corporate governance practices and performance of Indian firms

“…Within each stylized model of CG possibility of heterogeneity in CG practices may exist. There is no single standard set of an intra-CG model that exclusively determines the firm performance (Mans-Kemp et al, 2020). The individual element of CG practice can substantially affect the firm performance in a given national policy environment.…”