The compensation of busy directors: An international analysis

Stephen P. Ferris, Liao, Min-Yu (Stella) and Chris Tamm

Research in International Business and Finance, 2018, vol. 46, issue C, 294-312

Abstract: Using international data from 49 countries, we examine how director busyness affects global compensation. Prior literature reports conflicting evidence regarding the effect that multiple directorships has on firm value and performance. Some studies find that busy directors have skills and connections that benefit the firm while other research concludes that busy directors are too distracted to provide adequate monitoring. We determine that busy directors receive higher total compensation which is consistent with their greater skills and extensive networks. Busy directors, however, receive a significantly higher percentage of equity-based compensation which is consistent with their limited time for monitoring. This compensation structure is associated with improved market-to-book ratios, ROA, and profit margins. Finally, we discover that compensation committee members do not receive higher total compensation, but a lower percentage is equity linked.

Keywords: Governance; Boards; Busy; Compensation; Directors (search for similar items in EconPapers)
JEL-codes: G3 G34 J3 J33 M12 M52 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:46:y:2018:i:c:p:294-312

DOI: 10.1016/j.ribaf.2018.04.003

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