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
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2005-001.
Length: 34 pages
Date of creation: Jan 2005
Date of revision:
Contact details of provider:
Postal: Gen. A. K. Vaidya Marg, Goregaon (E), Mumbai 400065
Phone: (022) 840 0919/20/21
Fax: (022) 840 2752/2026
Web page: http://www.igidr.ac.in
More information through EDIRC
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," Microeconomics Working Papers 22394, East Asian Bureau of Economic Research.
- 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
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yermack, David, 1996. "Higher market valuation of companies with a small board of directors," Journal of Financial Economics, Elsevier, vol. 40(2), pages 185-211, February.
- Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
- Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2000.
"Ferreting Out Tunneling: An Application to Indian Business Groups,"
NBER Working Papers
7952, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2002. "Ferreting Out Tunneling: An Application To Indian Business Groups," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 121-148, February.
- Anil Shivdasani & David Yermack, 1999.
"CEO Involvement in the Selection of New Board Members: An Empirical Analysis,"
Journal of Finance,
American Finance Association, vol. 54(5), pages 1829-1853, October.
- Anil Shivdasani & David Yermack, 1998. "CEO Involvement in the Selection of New Board Members: An Empirical Analysis," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-059, New York University, Leonard N. Stern School of Business-.
- Miwa, Yoshiro & Ramseyer, J Mark, 2000.
"Corporate Governance in Transitional Economies: Lessons from the Prewar Japanese Cotton Textile Industry,"
The Journal of Legal Studies,
University of Chicago Press, vol. 29(1), pages 171-203, January.
- Yoshiro Miwa & J. Mark Ramseyer, 1999. "Corporate Governance in Transitional Economies: Lessons from the Pre-War Japanese Cotton Textile Industry," CIRJE F-Series CIRJE-F-48, CIRJE, Faculty of Economics, University of Tokyo.
- Cotter, James F. & Shivdasani, Anil & Zenner, Marc, 1997. "Do independent directors enhance target shareholder wealth during tender offers?," Journal of Financial Economics, Elsevier, vol. 43(2), pages 195-218, February.
- Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
- Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
- Hermalin, B.E. & Weisbech, M.S., 1991.
"The Effects of Board Composition and Direct Incentives on Firm Performance,"
91-02, Rochester, Business - Financial Research and Policy Studies.
- Benjamin E. Hermalin & Michael S. Weisbach, 1991. "The Effects of Board Composition and Direct Incentives on Firm Performance," Financial Management, Financial Management Association, vol. 20(4), Winter.
- Core, John E. & Holthausen, Robert W. & Larcker, David F., 1999. "Corporate governance, chief executive officer compensation, and firm performance," Journal of Financial Economics, Elsevier, vol. 51(3), pages 371-406, March.
- Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
- William O. Brown, Jr. & Michael T. Maloney, . "Exit, Voice, and the Role of Corporate Directors: Evidence from Acquisition Performance," Claremont Colleges Working Papers 1999-27, Claremont Colleges.
- Xiaonian Xu & Yan Wang, 1997. "Ownership structure, corporate governance, and corporate performance : the case of Chinese stock companies," Policy Research Working Paper Series 1794, The World Bank.
- Eliezer M. Fich & Anil Shivdasani, 2006. "Are Busy Boards Effective Monitors?," Journal of Finance, American Finance Association, vol. 61(2), pages 689-724, 04.
- Jayati Sarkar & Subrata Sarkar, 2000. "Large Shareholder Activism in Corporate Governance in Developing Countries: Evidence from India," International Review of Finance, International Review of Finance Ltd., vol. 1(3), pages 161-194.
- Tarun Khanna & Krishna Palepu, 2000. "Is Group Affiliation Profitable in Emerging Markets? An Analysis of Diversified Indian Business Groups," Journal of Finance, American Finance Association, vol. 55(2), pages 867-891, 04.
- Klein, April, 1998. "Firm Performance and Board Committee Structure," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 275-303, April.
- Vives,Xavier (ed.), 2000. "Corporate Governance," Cambridge Books, Cambridge University Press, number 9780521781640, April.
- Kang, Jun-Koo & Shivdasani, Anil, 1995. "Firm performance, corporate governance, and top executive turnover in Japan," Journal of Financial Economics, Elsevier, vol. 38(1), pages 29-58, May.
- Granovetter, Mark, 1995. "Coase Revisited: Business Groups in the Modern Economy," Industrial and Corporate Change, Oxford University Press, vol. 4(1), pages 93-130.
- McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October.
- Stephen P. Ferris & Murali Jagannathan & A. C. Pritchard, 2003. "Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments," Journal of Finance, American Finance Association, vol. 58(3), pages 1087-1112, 06.
- Ira C. Harris & Katsuhiko Shimizu, 2004. "Too Busy To Serve? An Examination of the Influence of Overboarded Directors," Journal of Management Studies, Wiley Blackwell, vol. 41(5), pages 775-798, 07.
- Pramod, Kumar Naik & Krishnan, Narayanan & Puja, Padhi, 2012. "R&D intensity and market valuation of firm: a study of R&D incurring manufacturing firms in India," MPRA Paper 37299, University Library of Munich, Germany.
- Jayati Sarkar & Subrata Sarkar, 2010.
"Auditor and audit committee independence in India,"
Indira Gandhi Institute of Development Research, Mumbai Working Papers
2010-020, Indira Gandhi Institute of Development Research, Mumbai, India.
- Emilia Peni, 2014. "CEO and Chairperson characteristics and firm performance," Journal of Management and Governance, Springer, vol. 18(1), pages 185-205, February.
- Jasmin Joecks & Kerstin Pull & Karin Vetter, 2013. "Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a “Critical Mass?”," Journal of Business Ethics, Springer, vol. 118(1), pages 61-72, November.
- Glenn Boyle & Glenn Boyle and Xu (Jane) Ji, 2011. "New Zealand Corporate Boards in Transition: Composition, Activity and Incentives Between 1995 and 2010," Working Papers in Economics 11/36, University of Canterbury, Department of Economics and Finance.
- Ahn, Seoungpil & Jiraporn, Pornsit & Kim, Young Sang, 2010. "Multiple directorships and acquirer returns," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2011-2026, September.
- Marc Essen & J. Oosterhout & Michael Carney, 2012. "Corporate boards and the performance of Asian firms: A meta-analysis," Asia Pacific Journal of Management, Springer, vol. 29(4), pages 873-905, December.
- Lee, Shih-Cheng & Lin, Chien-Ting & Chang, Pei-Ting, 2011. "An Ohlson valuation framework for valuing corporate governance: The case of Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 19(4), pages 420-434, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar).
If references are entirely missing, you can add them using this form.