Multiple directorships and corporate diversification

Pornsit Jiraporn, Young Sang Kim, Wallace N. Davidson

Research output: Contribution to journalArticlepeer-review

100 Scopus citations


This paper investigates the impact of multiple directorships on corporate diversification. We hypothesize that multiple directorships affect the quality of managerial oversight and, thus, influence the degree of corporate diversification and firm value. The empirical evidence lends credence to this notion. Specifically, we find that directors' busyness is inversely related to firm value. In other words, firms where board members hold more outside board seats suffer a deeper diversification discount. Further analysis also reveals that the negative effect of having overcommitted directors on the board is more pronounced in firms where agency costs are more severe, suggesting that the diversification discount is driven by agency conflicts. Our results aptly fit into the on-going debate on the benefits and detriments of multiple directorships.

Original languageEnglish (US)
Pages (from-to)418-435
Number of pages18
JournalJournal of Empirical Finance
Issue number3
StatePublished - Jun 1 2008

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


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