The Accounting Review · 2018 · 80 citations · 39 references
Public AffairsStrategic ManagementStrategyBoard LeadershipCorporate StrategyResource-based ViewBoard CompositionBoard Decision-makingBoard OversightBoard RolesBoard-executive RelationsStrategic OversightBoard BusynessBoard CapacityBoard CharacteristicsBoard Strategic OversightDeterminants Of Firm ValueDirector BusynessFirm Value EffectsOperating Performance Analysis
ABSTRACT Prior literature documents that multiple directorships are negatively associated with operating performance due to overly busy directors; however, multiple directorships may also increase firm value because directors gain access to valuable connections, resources, and information through their multiple appointments. This paper examines M&A that terminate target firms' entire boards as a negative shock to both board busyness and connections at other firms, as a complement to Hauser (2018). We document that firms experiencing a decrease in multiple directorships due to M&A exhibit improved operating performance, monitoring, and strategic advising, on average. Firms with the smallest decrease in board connections experience the greatest improvement in operating performance and advising, while firms with the greatest decrease in board connections experience null or negative effects on operating performance and advising. Our findings provide new evidence of the costs and benefits of multiple directorships based on board busyness and connections.
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Eugene F. Fama, Kenneth R. French · Journal of Financial Economics · 1997 · 6.2K citations
The market for corporate control
Michael C. Jensen, Richard S. Ruback · Journal of Financial Economics · 1983 · 4.2K citations
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Jennifer Francis, Ryan LaFond, Per Olsson et al. · Journal of Accounting and Economics · 2005 · 3.2K citations
Business, Accountancy, Accounting +10