Abstract
This study examines the relevance of non‐executive outside directors with multiple directorships for corporate governance building on a large panel of European listed firms in the period 2003 to 2011. Focusing on executive turnover as an indicator for effective monitoring, the findings reveal that multiple directorships and product market competition are substitutes. Outsiders increase executive turnover in underperforming firms exclusively if competition in the industry is weak. In environments with effective competition, outsiders do not significantly influence the decision to replace underperforming managers. In fiercely competitive industries, the market pressure seems to effectively limit managerial discretion for opportunistic behavior. Copyright © 2016 John Wiley & Sons, Ltd.
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