Too Busy or Well-Connected? Evidence from a Shock to Multiple Directorships

• 成果类型: Article
• 署名作者: Brown, Anna Bergman; Dai, Jing; Zur, Emanuel
• 署名单位: University of Connecticut; Southwestern University of Finance & Economics - China; University System of Maryland; University of Maryland College Park
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52165
• 发表日期: 2019
• 页码: 83-104
• 关键词: CORPORATE GOVERNANCE; BOARD SIZE; determinants; earnings; accruals; COMPENSATION; INTERLOCKS; QUALITY; COSTS

摘要

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.