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Multiple directorships and corporate performance in Australian listed companies

Kiel, Geoffrey C. & Nicholson, Gavin J. (2006) Multiple directorships and corporate performance in Australian listed companies. Corporate Governance: An International Review, 14(6), pp. 530-546.

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Abstract

How many directorships are too many? Globally, normative advice emphasises the importance of limiting the number of directorships any individual should hold due to the workloads they entail. However, there is little empirical evidence to support this view. Rather, there is a strong tradition of supporting multiple directorships as a mechanism for the firm to co-opt external resources. To explore the issue of director workloads and multiple directorships, we first consider the issues related to multiple directorships and outline the conclusions of extant international and Australian studies into multiple directorships. We then detail our objectives in undertaking this research and our approach to data collection.

Our findings indicate that the incidence of multiple directorships in Australian listed companies is low. We also find that many of the apparent examples of multiple directorships are due to related entities, which share common directors and, due to the nature of these entities, have much lower workload requirements. Further, there does not appear to be any relationship between holding multiple directorships and firm financial performance. Finally, we discuss the implications for boards and those interested in governance, particularly the need to ensure governance recommendations and guidelines reflect empirical findings. We offer one solution to address the concerns of boards, investors, other stakeholders and the community regarding multiple directorships: board and individual director evaluations.

Impact and interest:

10 citations in Scopus
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7 citations in Web of Science®

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ID Code: 4936
Item Type: Journal Article
Additional URLs:
Keywords: Boards of directors, multiple directorships, corporate governance
DOI: 10.1111/j.1467-8683.2006.00528.x
ISSN: 1467-8683
Subjects: Australian and New Zealand Standard Research Classification > LAW AND LEGAL STUDIES (180000) > LAW (180100)
Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > ACCOUNTING AUDITING AND ACCOUNTABILITY (150100) > Auditing and Accountability (150102)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Copyright Owner: Copyright 2006 Blackwell Publishing
Copyright Statement: The definitive version is available at www.blackwell-synergy.com
Deposited On: 24 Oct 2006
Last Modified: 29 Feb 2012 23:26

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