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Busy directors and firm performance: a replication and extension of Hauser (2018)

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  • Sorin Daniliuc
  • Lingwei Li
  • Marvin Wee

Abstract

We replicate the 2018 study by Hauser and examine whether director appointments impact firm performance by exploiting the exogenous reduction in board appointments generated by mergers that terminate target boards. Using an extended sample, we find increases in return on assets and Tobin’s q for firms with a reduction in board appointments (i.e., treated firms), confirming the results in Hauser’s study. In further analysis, we find greater improvements in firm performance when the target and treated firms are from different industries than if they are from the same industry. The results further demonstrate that director appointments influence firm performance via a workload channel.

Suggested Citation

  • Sorin Daniliuc & Lingwei Li & Marvin Wee, 2021. "Busy directors and firm performance: a replication and extension of Hauser (2018)," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1415-1423, April.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:s1:p:1415-1423
    DOI: 10.1111/acfi.12631
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    References listed on IDEAS

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    1. Xia, Changyuan & Zhang, Xiaowei & Cao, Chunfang & Xu, Nan, 2019. "Independent director connectedness in China: An examination of the trade credit financing hypothesis," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 209-225.
    2. Renee B. Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2010. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 58-107, March.
    3. David Yermack, 2006. "Board Members and Company Value," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 20(1), pages 33-47, April.
    4. Fernández Méndez, Carlos & Pathan, Shams & Arrondo García, Rubén, 2015. "Monitoring capabilities of busy and overlap directors: Evidence from Australia," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 444-469.
    5. Sarkar, Jayati & Sarkar, Subrata, 2009. "Multiple board appointments and firm performance in emerging economies: Evidence from India," Pacific-Basin Finance Journal, Elsevier, vol. 17(2), pages 271-293, April.
    6. Kin-Wai Lee & Cheng-Few Lee & Robert Faff, 2014. "Are Multiple Directorships Beneficial in East Asia?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 54(3), pages 999-1032, September.
    7. Hauser, Roie, 2018. "Busy directors and firm performance: Evidence from mergers," Journal of Financial Economics, Elsevier, vol. 128(1), pages 16-37.
    8. Stephen Gray & John Nowland, 2018. "Director workloads, attendance and firm performance," Accounting Research Journal, Emerald Group Publishing Limited, vol. 31(2), pages 214-231, July.
    9. Shams Pathan & Peh Hwa Wong & Karen Benson, 2019. "How do ‘busy’ and ‘overlap’ directors relate to CEO pay structure and incentives?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(2), pages 1341-1382, June.
    10. Kutubi, Shawgat S. & Ahmed, Kamran & Khan, Hayat, 2018. "Bank performance and risk-taking — Does directors' busyness matter?," Pacific-Basin Finance Journal, Elsevier, vol. 50(C), pages 184-199.
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    Cited by:

    1. Qi Wang & Maoxia Sun & Kongwen Wang, 2023. "Do Reputation Incentives Matter? Busy Directors and Corporate Social Responsibility in China," Sustainability, MDPI, vol. 15(6), pages 1-17, March.

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