Are Busy Directors Good for Business

This paper draws on the top 100 firms in Australia, sampled every three years from 1990 through to 2008, to analyse the impact of busy directors on large Australian companies. Information on directors, CEO and Chairperson along with shareholder information is hand collected from the annual reports of largest 100 companies. We focus on director and CEO outside engagements using a count of outsider directorships, outside CEO positions, outside chairperson positions and industry/professional memberships rather than just focusing on a count of outside directorships. Using fixed effects panel data analysis we find that firm performance is decreasing in size and leverage over the study period. Board busyness is found to be increasing in firm size and leverage and decreasing in CEO tenure relative to chairperson tenure. CEO busyness is found to be increasing in size, chair busyness and CEO tenure relative to chair tenure and decreasing in CEO duality and CEO tenure relative to chairperson tenure. An important contribution to the literature is the finding of variation in the results for outside engagements in private firms compared with outside engagements in public firms. We also note important differences in the determinants of CEO busyness relative to the determinants of board busyness.