IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The virtues of fewer directorships

  • Lev B.
  • Gu F.
  • Bar-Hava K.


Registered author(s):

    The busy director multi-directorships phenomenon increased in recent years, despite the substantial rise in directors responsibility and time demands. Busy directors are more experienced and better connected than single-firm directors, but also more distracted. The empirical evidence on the tradeoff between these two effects on board effectiveness is mixed. We depart from previous research by examining the reaction to a busy directors resignation by the shareholders of the companies that still keep the director on their board. Our findings indicate that when busy directors resign from a board, the investors of firms that continue boarding the director react positively to the news of the resignation. Investor reaction is more positive when there is a larger demand for the directors services, when the resignation frees up more of the directors time, and when the director is of higher quality. Our analysis suggests that three directorships are perceived optimal by investors. Finally, investors positive reaction to the resignation of directors from other companies fails to fully capture the governance benefits of such resignation.

    If 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.

    File URL:
    Download Restriction: no

    Paper provided by Maastricht University, Graduate School of Business and Economics (GSBE) in its series Research Memorandum with number 037.

    in new window

    Date of creation: 2013
    Date of revision:
    Handle: RePEc:unm:umagsb:2013037
    Contact details of provider: Postal:
    P.O. Box 616, 6200 MD Maastricht

    Phone: +31 (0)43 38 83 830
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:unm:umagsb:2013037. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Leonne Portz)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.