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Is Busy Really Busy? Board Governance Revisited


  • Christian Andres,

    Corresponding author
    • Address for correspondence: Christian Andres, WHU – Otto Beisheim School of Management, Burgplatz 2, 56179 Vallendar, Germany.e-mail:

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  • Inga van den Bongard,

  • Mirco Lehmann

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    • Christian Andres is at WHU – Otto Beisheim School of Management, Burgplatz 2, 56179 Vallendar, Germany. Inga van den Bongard is at the University of Mannheim, Schloss, 68131 Mannheim, Germany. Mirco Lehmann is at the University of Bonn, Adenauerallee 24–42, 53113 Bonn, Germany. The authors would like to thank an anonymous referee, the Editor (Martin Walker), Ingolf Dittmann, Kevin McLaughlin, Ernst Maug, Stefan Petry, Harley E. Ryan Jr., Erik Theissen, seminar participants at the University of Mannheim, the University of Innsbruck, the University of Hamburg, and the University of Rotterdam, participants of the 2009 European Financial Management Association Meeting in Milan, the 2009 Annual Meeting of the German Finance Association in Frankfurt, and the 2010 Annual Meeting of the Financial Management Association in New York for their helpful comments. (Paper received January, 2013, revised version accepted October, 2013).


We investigate the relationship between firm governance and the board's position in the social network of directors. Using a sample of 133 German firms over the four-year period from 2003 to 2006, we find that firms with intensely connected supervisory boards are (1) associated with lower firm performance, and (2) pay their executives significantly more. We interpret these results as evidence of poor monitoring in firms with directors who are more embedded in the social network. In both cases, simple measures for busy directors that were used by other studies in the past fail to show any significant pattern. The findings suggest that the quality and structural position of additional board seats may play a bigger role than simply the number of board appointments.