Are busy boards detrimental?

Laura Field, Michelle Lowry () and Anahit Mkrtchyan

Journal of Financial Economics, 2013, vol. 109, issue 1, 63-82

Abstract: Busy directors have been widely criticized as being ineffective. However, we hypothesize that busy directors offer advantages for many firms. While busy directors may be less effective monitors, their experience and contacts arguably make them excellent advisors. Among IPO firms, which have minimal experience with public markets and likely rely heavily on their directors for advising, we find busy boards to be common and to contribute positively to firm value. Moreover, these positive effects of busy boards extend to all but the most established firms. Benefits are lowest among Forbes 500 firms, which likely require more monitoring than advising.

Keywords: Corporate Governance; Board of Directors; Initial public offerings; Venture capital (search for similar items in EconPapers)
JEL-codes: G24 G34 K22 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (156)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:109:y:2013:i:1:p:63-82

DOI: 10.1016/j.jfineco.2013.02.004

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