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Do Busy Boards Add Value to Standalone Firms relative to Business Groups?Evidence from India

Author

Listed:
  • Sugato Chakravarty

    (Purdue University)

  • Vijaya B Marisetty

    (RMIT University)

  • Madhu Veeraraghavan

    (Monash University)

Abstract

We investigate whether busy boards add more value to standalone firms compared to business group affiliated firms in India – an economy plagued with significant institutional voids. Using board composition data of the top 500 Indian firms spanning the period 2003 to 2006, we find that firm performance improves when its board changes from being a board with nonbusy outside directors to a board with busy outside directors. Furthermore, directors’ qualifications and experience determine their directorships and degree of busyness. We also find that firms affiliated with business groups exhibit a negative relationship to the number of busy outside directors.

Suggested Citation

  • Sugato Chakravarty & Vijaya B Marisetty & Madhu Veeraraghavan, 2011. "Do Busy Boards Add Value to Standalone Firms relative to Business Groups?Evidence from India," Working Papers 1009, Purdue University, Department of Consumer Sciences.
    • Handle: RePEc:csr:wpaper:1009
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    More about this item

    Keywords

    Institutional voids; business groups; corporate boards; board busyness; reputation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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