Independent directors: Exploring the heterogeneous nature of multiple directorships

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Jayasinghe Hewa Dulige ORCID logo, Muhammad Jahangir Ali ORCID logo, Paul R. Mather ORCID logo, Suzanne Young ORCID logo


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We examine the effect of independent directors’ (IDs’) heterogeneous directorships on performance and diversification of high growth firms in a sample of 1152 firm-year Australian listed company observations over the period 2007 to 2010. We find a positive association between some measures of IDs’ heterogeneous directorships and the firm performance of high-growth firms as measured by return on assets. We also find a positive association between IDs’ heterogeneous board ties and firm diversification. This study highlights that decisions concerning the appointment of IDs to corporate boards should be based on the strategic context of their other directorships. We extend the literature on multiple directorships by showing that it is not a narrow focus on the number of directorships as a proxy for reputation or busyness that matters. Instead, it is the precise nature of these directorships.

Keywords: Independent Directors, Heterogeneous Board Ties, Firm Performance, Firm Diversification, Growth Firms

Authors’ individual contribution: Conceptualisation – J.H.D., P.M., M.J.A., and S.Y.; Methodology – J.H.D., P.M., M.J.A.; Formal Analysis – J.H.D.; Writing – J.H.D.; Writing – Review & Editing – P.M., M.J.A., and S.Y.; Supervision – P.M., M.J.A., and S.Y.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: We appreciate the helpful comments and suggestions received from participants at the 2015 Corporate Governance and Financial Markets Conference, Perth, La Trobe University seminar and an anonymous referee. Any remaining errors are ours.

JEL Classification: M40, M41, M49

Received: 20.02.2020
Accepted: 01.05.2020
Published online: 04.05.2020

How to cite this paper: Hewa Dulige, J., Ali, M. J., Mather, P., & Young, S. (2020). Independent directors: Exploring the heterogeneous nature of multiple directorships. Corporate Ownership & Control, 17(4), 18-34.