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Role Of Inside Directors In Mitigating Negative Effects Of Outside Directors’ Busyness, Syed Mainuddin Kamal

Doctoral Dissertations

In this study, I investigate the effect of outside directors’ busyness on firm performance, and how the presence of a certified inside director (CID) on the board alters the busyness effect. Busy outside directors are over-stretched to provide adequate monitoring. Certified inside directors (CIDs), inside directors holding a directorship at an unaffiliated firm, have director labor market incentives to focus on their own firm’s performance and share firm-specific information to outside directors for effective monitoring. I find that the negative effect of outside directors’ busyness on firm performance is mitigated when a firm’s board includes a certified inside director (CID). …