Issue 1, 2016

Berezinets I. V., Ilina Yu. B. Directors’ Busyness and Financial Performance.

This paper investigates one of the important characteristics of the corporate board — multiple directorships with a particular focus on directors’ busyness. The paper analyses busyness criteria both for a board and directors, motives for multiple directors’ positions for companies and board members, the relationship between board busyness and company’s performance. The reputation and busyness hypotheses are analysed from perspective of boards multiple directorships impact on financial performance and value. Directors participation in several boards leads to their excessive busyness. It may be to the detriment of corporate performance, since due to relatively less time available those directors devote less efforts to their duties. At the same time additional resources directors obtain from multiple positions on boards is important factor to enhance director’s reputation. In this paper the authors provide thorough literature review on the busyness of directors and boards, analysis of the relationship between directors’ busyness and company’s performance from perspective of two approaches — reputation hypothesis and busyness hypothesis. This paper investigates the directors’ busyness as a complex issue that has its specifics and implications for companies from developed and emerging markets. The value of the paper is that it provides deep analysis of the busyness and its effect on corporate performance results. The authors find that directors’ busyness needs further investigation in emerging markets, given the specifics of those markets, the scarce of professional directors at the labour market, the special role of board networks and other external resources directors could obtain through multiple directors positions for directors themselves and board reputation. The main implication is that the paper articulates the directions for further research of this issue that should go beyond the hypotheses used in the existing sources, taking into account the specifics of emerging markets. Keywords: board of directors, board busyness, directors’ multiple directorships, financial performance.

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