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TWO FACES OF BUSY OUTSIDE DIRECTORS
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Chia-Wei Chen 
, Jang Shee Barry Lin , Bingsheng Yi
Abstract
In this study, we examine how multiple directorships held by outside directors (busy outside directors) influence shareholder wealth in diversifying acquisitions. With a sample of 893 diversifying acquisitions from 1998 to 2004, we find a negative (positive) busy-director effect for diversifying acquisitions of public-targets (private-targets). Busy directors are negatively (positively) associated with the five-day cumulative abnormal returns in acquisitions involving public (private) targets, where merger-related agency problems are more likely. Our evidence support the notion that, in the case of diversifying acquisitions, increased managerial monitoring plays a more important role versus enhanced advising and business connection from busy directors.
Keywords: Boards of Directors, Busy Outside Directors, Diversifying Acquisitions, Agency Problems
How to cite this paper: Chen, C.-W., Barry Lin, J.-S., & Yi, B. (2008). Two faces of busy outside directors. Corporate Ownership & Control, 6(2-4), 467-474. https://doi.org/10.22495/cocv6i2c4p5
