Quantity versus quality of directors’ time: the effectiveness of directors and number of outside directorships

Abstract

Outlines the role of directors and previous research on their selection, reputation, relationship to firm performance and multiple directorships, noting criticism of those who sit on many boards. Develops hypothese on the value directors provide through their time and expertise and tests them on a sample of 121 US firms being targeted for takeover 1989‐1993 to explore the link between pre‐offer and post‐offer firm performance and the number of directorships held by their directors. Presents the results, which suggest that directors with less time (i.e. more directorships) do not necessarily provide worse routine monitoring or lead to lower merger premiums. Recognizes some other factors affecting interpretation and calls for further research.