Multiple Directorships and Related Parties Transactions: The Weakness of Numbers

Oladipupo Muhrtala Tijani, Mubaraq Sanni and Karimu Adebayo Ishola
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Oladipupo Muhrtala Tijani: Kwara State University, Nigeria
Mubaraq Sanni: Kwara State University, Nigeria
Karimu Adebayo Ishola: Al-Hikmah University, Nigeria

European Journal of Business Science and Technology, 2015, vol. 1, issue 2, 137-148

Abstract: We examine whether the presence of outside directors with multiple boards seats influence firms related-parties transactions. These non-executive directors with vast skill, experience, knowledge, prestige and shared networks are part of major Boards Committees responsible for key corporate policies, strategy and management. Subsequently, it remains an untested assumption whether the outcome of related parties' transactions are influenced by the presence of this class of 'busy directors'. We obtain data from 142 companies across five sectors between 2009 and 2014 and conduct analysis using a two-stage multiple regression. The results reveal that the existence of multiple directorships on boards failed to evolve as predictors for related parties' transactions. We thus conclude that the presence of these 'busy directors' on boards does not alter a firm's related parties' transactions significantly. Overall, this may suggest that the influence of executive directors and other outside directors and key management personnel do play an important role in explaining organizationally complex strategic decisions in this regard.

Keywords: multiple boards seats; board committees; related parties' transactions (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:men:journl:v:1:y:2015:i:2:p:137-148

DOI: 10.11118/ejobsat.v1i2.12

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