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Board Seat Accumulation by Executives: A Shareholder's Perspective




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    • *Perry is from the Kelley School of Business, Indiana University, Indianapolis, and Peyer is from INSEAD. Special thanks to the former editor (Rick Green) and an anonymous referee for very helpful comments and suggestions. We also would like to thank Christopher Anderson, David Becher, Marco Becht, John Bizjak, James Booth, Arturo Bris, Daniel Deli, Greg Durham, Swaminathan Kalpathy, Marc Zenner, and seminar participants at the University of Arizona, Drexel University, HEC Paris, Indiana University, Indianapolis, INSEAD, the Securities and Exchange Commission, the 2002 Conference on Corporate Control and Corporate Disclosure at the University of Kansas, the 2003 European Finance Association Meetings, and the 2004 BSI Gamma Conference on Corporate Governance. We also thank Hal Bosher, Sumit Jamuar, and Swaminathan Kalpathy for research assistance. Part of this research was completed while the first author was at Arizona State University. Tod Perry thanks the Investor Responsibility Research Center for help in obtaining some of the board data used in this study and acknowledges support from a Furst Research Grant in the Department of Finance at Arizona State University. The authors also acknowledge the financial support of the BSI Gamma Foundation.


While reformers have argued that multiple directorships for executives can destroy value, we investigate firms with executives that accept an outside directorship and find negative announcement returns only when the executive's firm has greater agency problems. When fewer agency concerns exist, additional directorships relate to increased firm value. Announcement returns are also higher when executives accept an outside directorship in a financial, high-growth, or related-industry firm. Our results suggest that outside directorships for executives can enhance firm value, which has important implications for firms employing executives nominated for outside boards and for policy recommendations restricting the number of directorships.

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