Multiple directorships and acquirer returns

Seoungpil Ahn, Pornsit Jiraporn, Young Sang Kim

Research output: Contribution to journalArticlepeer-review

157 Scopus citations


This paper examines the impact of multiple directorships on stockholder wealth around the announcements of mergers and acquisitions. Grounded in agency theory, we argue that multiple directorships affect the quality of managerial oversight and thus influence agency conflicts in acquisition decisions. We show that acquiring firms where directors hold more outside board seats experience more negative abnormal returns. This adverse effect, nonetheless, does not extend across the entire range of multiple directorships. Rather, the detrimental impact is significant only when the number of outside board seats surpasses a certain threshold. We interpret this result as suggesting that directors serving on multiple boards allow value-destroying acquisitions when they become too busy beyond a certain point, and the effect of directors' busyness on acquisition performance appears to be nonlinear. We employ several alternative definitions of directors' busyness and obtain consistent results.

Original languageEnglish (US)
Pages (from-to)2011-2026
Number of pages16
JournalJournal of Banking and Finance
Issue number9
StatePublished - Sep 2010

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


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