Too Busy to Mind the Business? Monitoring by Directors with Mutiple Board Appointements
Stephen P. Ferris, Murali Jagannathan and A.C. Pritchard
Journal of Finance forthcoming, June 2003

Criticisms have been directed at directors with multiple directorships, contenting that such directors are incapable of effectively monitoring the management of multiple firms. The study examines this issue and finds results that do not support such criticisms. In particular, the study finds that directors holding multiple directorships serve on more sub committees and attend more meetings, relative to directors who serve on single firms. Moreover, there is no relationship between the number of directorships and the incidence of securities litigation, which is inconsistent with the argument that directors holding multiple directorships are too busy to be able to detect the fraudulent activities of managers.