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Busy directors and firm performance: Evidence from mergers

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  • Hauser, Roie

Abstract

This paper studies whether director appointments to multiple boards impact firm outcomes. To overcome endogeneity of board appointments, I exploit variation generated by mergers that terminate entire boards and thus shock the appointments of those terminated directors. Reductions of board appointments are associated with higher profitability, market-to-book, and likelihood of directors joining board committees. The performance gains are particularly stark when directors are geographically far from firm headquarters. I conclude that the effect of the shocks to board appointments is: (i) evidence that boards matter; and (ii) plausibly explained by a workload channel: when directors work less elsewhere, their companies benefit.

Suggested Citation

  • Hauser, Roie, 2018. "Busy directors and firm performance: Evidence from mergers," Journal of Financial Economics, Elsevier, vol. 128(1), pages 16-37.
    • Handle: RePEc:eee:jfinec:v:128:y:2018:i:1:p:16-37
    DOI: 10.1016/j.jfineco.2018.01.009
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    More about this item

    Keywords

    Board of directors; Board composition; Busy boards; Corporate governance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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    1. Busy directors and firm performance: Evidence from mergers (JFE 2018) in ReplicationWiki

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