Is Busy Really Busy? Board Governance Revisited

Andrés, Christian; Bongard, Inga van den; Lehmann, Mirco

doi:10.2139/ssrn.1569531

Cited by 14 publications

(17 citation statements)

References 51 publications

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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,2013). Serving on many boards can diminish directors' dedication and negatively affect the corporate decisions (Lei and Deng, 2014;Lopez and Morros, 2014).…”

Section: Multiple Directorshipsmentioning

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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Section: Multiple Directorshipsmentioning

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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“…There are also a number of works such as [1] that, using the case of Germany, suggest a negative correlation between firm performance and centrality. In [10], using data on listed firms in Italy and a comparison with a number of previous works, it is argued that there are certainly significant differences between countries with respect to the correlation of board centrality and economic performance.…”

Section: Related Workmentioning

confidence: 99%

“…In board interlock networks, node (firm) centrality is widely considered as an indication of a powerful or at least advantageous position [33,36]. An extensive body of literature discusses the relationship between the economic performance of a firm and centrality [1,10,22,28,30]. However, this literature has found diverse outcomes in different countries when it comes to the precise relation between centrality and firm performance.…”

Section: Introductionmentioning

confidence: 99%

Centrality in the global network of corporate control

Takes

Heemskerk

2016

Soc. Netw. Anal. Min.

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Corporations across the world are highly interconnected in a large global network of corporate control. This paper investigates the global board interlock network, covering 400, 000 firms linked through 1, 700, 000 edges representing shared directors between these firms. The main focus is on the concept of centrality, which is used to investigate the embeddedness of firms from a particular country within the global network. The study results in three contributions. First, to the best of our knowledge for the first time we can investigate the topology as well as the concept of centrality in corporate networks at a global scale, allowing for the largest cross-country comparison ever done in interlocking directorates literature. We demonstrate, amongst other things, extremely similar network topologies, yet large differences between countries when it comes to the relation between economic prominence indicators and firm centrality. Second, we introduce two new metrics that are specifically suitable for comparing the centrality ranking of a partition to that of the full network. Using the notion of centrality persistence we propose to measure the persistence of a partition's centrality ranking in the full network. In the board interlock network, it allows us to assess the extent to which the footprint of a national network is still present within the global network. Next, the measure of centrality ranking dominance tells us whether a partition (country) is more dominant at the top or the bottom of the centrality ranking of the full (global) network. Finally, comparing these two new measures of persistence and dominance between different countries allows us to classify these countries based the their embeddedness, measured using the relation between the centrality of a country's firms on the national and the global scale of the board interlock network.

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“…Busy directors are worse monitors or advisors (Fich and Shivdasani, 2006) because of time constraints, event conflicts, and directors' effort constraints (Ferris, Jagannathan and Pritchard, 2003). For instance, busy boards are associated with poor firm performance (Fich and Shivdasani, 2006;Jiraporn, Kim and Davidson, 2008;Ahn, Jiraporn and Kim, 2010;Andres, Bongard and Lehmann, 2013;Omer, Shelley and Tice, 2014). Busier boards also have lower board meeting attendance (Jiraporn, Davidson, DaDalt and Ning, 2009), a greater likelihood of financial statement fraud (Beasley, 1996), and weaker corporate governance (Fich and Shivdasani, 2006;Andres, Bongard and Lehmann, 2013).…”

Section: Board Connections Board Busyness and Credit Ratingsmentioning

confidence: 99%

“…For instance, busy boards are associated with poor firm performance (Fich and Shivdasani, 2006;Jiraporn, Kim and Davidson, 2008;Ahn, Jiraporn and Kim, 2010;Andres, Bongard and Lehmann, 2013;Omer, Shelley and Tice, 2014). Busier boards also have lower board meeting attendance (Jiraporn, Davidson, DaDalt and Ning, 2009), a greater likelihood of financial statement fraud (Beasley, 1996), and weaker corporate governance (Fich and Shivdasani, 2006;Andres, Bongard and Lehmann, 2013). This suggests that well-connected boards may actually reduce monitoring by increasing board busyness.…”

Section: Board Connections Board Busyness and Credit Ratingsmentioning

confidence: 99%

Director Networks and Credit Ratings

Benson

Iyer²,

Kemper

et al. 2016

SSRN Journal

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We explore the effect of director social capital, directors with large and influential networks, on credit ratings. Using a sample of 11,172 firm‐year observations from 1999 to 2011, we find that larger board networks are associated with higher credit ratings than both firm financial data and probabilities of default predict. Near‐investment grade firms improve their forward‐looking ratings when their board is more connected. Last, we find that larger director networks are more beneficial during recessions, and times of increased financial uncertainty. Our results are robust to controls for endogeneity. Tests confirm that causality runs from connected boards to credit ratings.

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Is Busy Really Busy? Board Governance Revisited

Cited by 14 publications

References 51 publications

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

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

Centrality in the global network of corporate control

Director Networks and Credit Ratings

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