The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Tue, 14 Apr 2026 11:31:36 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Better Directors or Distracted Directors? An International Analysis of Busy Boards – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Better Directors or Distracted Directors? An International Analysis of Busy Boards https://corpgov.law.harvard.edu/2017/09/16/better-directors-or-distracted-directors-an-international-analysis-of-busy-boards/?utm_source=rss&utm_medium=rss&utm_campaign=better-directors-or-distracted-directors-an-international-analysis-of-busy-boards https://corpgov.law.harvard.edu/2017/09/16/better-directors-or-distracted-directors-an-international-analysis-of-busy-boards/#comments Sat, 16 Sep 2017 14:06:39 +0000 https://corpgov.law.harvard.edu/?p=101337?d=20170916100639EDT Posted by Stephen P. Ferris, University of Missouri; Narayanan Jayaraman, Georgia Institute of Technology; and Stella Liao, Illinois State University, on Saturday, September 16, 2017
Editor's Note:

Stephen P. Ferris is Professor and Director of the Financial Research Institute at the University of Missouri’s Scheller College of Business. Narayanan Jayaraman is Professor of Finance at Georgia Institute of Technology’s Scheller College of Business. Min-Yu (Stella) Liao is Assistant Professor at the Illinois State University. This post is based on a recent paper by Professor Ferris, Professor Jayaraman, and Professor Liao.

The issue of multiple directorships on corporate boards has come under increasing scrutiny from both academicians and practitioners. There is conflicting evidence in the academic literature about the impact of multiple directorships on firm value and performance. Core, Holthausen, and Larcker (1999) report that busy directors require an excessively high level of compensation, which in turn, leads to poor firm performance. Ferris, Jagannathan, and Pritchard (2003) find, however, no relation between the number of directorships held by a director and firm valuation as proxied by the market-to-book ratio. This evidence is disputed by Fich and Shivdasani (2006) who report that firms with busy boards exhibit lower market-to-book ratios, reduced profitability, and a weakened sensitivity of CEO turnover to firm performance. More recently, Field, Lowry and Mkrtchyan (2013) hypothesize that busy directors offer advantages for many firms, with such individuals providing significant advising abilities to younger firms. They argue that the positive benefits of busy boards extend to all but the most established firms.

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