Multiple Board Appointments and Firm Performance in Emerging Economies : Evidence from India
AbstractThe relation between multiple directorships, busy directors and firm performance has been researched predominantly in the context of developed economies, notably the US. This paper extends the existing literature on multiple directorships in two ways; first, by providing additional evidence on its effect on firm performance, but with respect to an emerging economy, India, and secondly, by suggesting an alternative measure of directorial busyness that is more general in its applicability compared to those that have been applied in the existing literature. Using a sample of 500 large firms from the Indian corporate sector for the year 2002-03, the paper finds multiple directorships by independent directors to correlate positively with firm value thereby supporting the quality hypothesis that busy directors are likely to be better directors, a result that is different from the existing evidence on busy directors. Multiple directorships by insider directors are, however, negatively related to firm performance. Estimation of group and non-group companies separately reveals that the quality effect of independent directors persists for the former but disappears for the latter. In general, the results suggest that the relation between busy directors and firm performance may depend on the institutional context and on the type of director.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Microeconomics Working Papers with number 22394.
Date of creation: Jan 2005
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Multiple Directorships; Busy Directors; firm performance;
Other versions of this item:
- 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.
- Jayati Sarkar & Subrata Sarkar, 2005. "Multiple board appointments and firm performance in emerging economies: Evidence from India," Working Papers 2005-001, Madras School of Economics,Chennai,India.
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- G39 - Financial Economics - - Corporate Finance and Governance - - - Other
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
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