Multiple directorships and corporate diversification
- 作者：Pornsit Jiraporn ; Young Sang Kim ; Wallace N. Davidson III
- 关键词：Diversification ; Multiple directorships ; Agency theory ; Board appointments
- 刊名：Journal of Empirical Finance
- 出版年：2008
- 期刊代码：40_09275398
- 类别：eco
- 出版时间：June 2008
- 卷：15
- 期：3
- 页码：418-435
- 文件大小：234 K
摘要
This paper investigates the impact of multiple directorships on corporate diversification. We hypothesize that multiple directorships affect the quality of managerial oversight and, thus, influence the degree of corporate diversification and firm value. The empirical evidence lends credence to this notion. Specifically, we find that directors’ busyness is inversely related to firm value. In other words, firms where board members hold more outside board seats suffer a deeper diversification discount. Further analysis also reveals that the negative effect of having overcommitted directors on the board is more pronounced in firms where agency costs are more severe, suggesting that the diversification discount is driven by agency conflicts. Our results aptly fit into the on-going debate on the benefits and detriments of multiple directorships.