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Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments

Authors

  • Stephen P. Ferris,

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    • Ferris is from the College of Business, University of Missouri-Columbia, Jagannathan is from the School of Management, Binghamton University-SUNY, and Pritchard is from the Law School, University of Michigan. This paper has benefited from the helpful comments and suggestions of Merritt Fox, Richard Lempert, Anil Makhija, Ronald Mann, Mark West, seminar participants at the University of Michigan, University of Missouri-Columbia, Vanderbilt University, and the American Law and Economics Association and the Financial Management Association annual meetings. Pritchard acknowledges financial support from the Cook Fund of the University of the Michigan Law School. The authors alone are responsible for this work and any errors or omissions.
  • Murali Jagannathan,

    Search for more papers by this author
    • Ferris is from the College of Business, University of Missouri-Columbia, Jagannathan is from the School of Management, Binghamton University-SUNY, and Pritchard is from the Law School, University of Michigan. This paper has benefited from the helpful comments and suggestions of Merritt Fox, Richard Lempert, Anil Makhija, Ronald Mann, Mark West, seminar participants at the University of Michigan, University of Missouri-Columbia, Vanderbilt University, and the American Law and Economics Association and the Financial Management Association annual meetings. Pritchard acknowledges financial support from the Cook Fund of the University of the Michigan Law School. The authors alone are responsible for this work and any errors or omissions.
  • A. C. Pritchard

    Search for more papers by this author
    • Ferris is from the College of Business, University of Missouri-Columbia, Jagannathan is from the School of Management, Binghamton University-SUNY, and Pritchard is from the Law School, University of Michigan. This paper has benefited from the helpful comments and suggestions of Merritt Fox, Richard Lempert, Anil Makhija, Ronald Mann, Mark West, seminar participants at the University of Michigan, University of Missouri-Columbia, Vanderbilt University, and the American Law and Economics Association and the Financial Management Association annual meetings. Pritchard acknowledges financial support from the Cook Fund of the University of the Michigan Law School. The authors alone are responsible for this work and any errors or omissions.

Abstract

We examine the number of external appointments held by corporate directors. Directors who serve larger firms and sit on larger boards are more likely to attract directorships. Consistent with Fama and Jensen (1983), we find that firm performance has a positive effect on the number of appointments held by a director. We find no evidence that multiple directors shirk their responsibilities to serve on board committees. We do not find that multiple directors are associated with a greater likelihood of securities fraud litigation. We conclude that the evidence does not support calls for limits on directorships held by an individual.

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