Monitoring by Busy and Overlap Directors: An Examination of Executive Remuneration and Financial Reporting Quality
REFC – Spanish Journal of Finance and Accounting (Forthcoming)
53 Pages Posted: 18 Oct 2016
Date Written: October 13, 2016
Abstract
We examine the influence of multiple board directorships and boards’ committee memberships on three board supervisory outcomes: executive remuneration, external auditor opinion and earnings management. The study uses a panel of 122 non-financial companies listed on the Spanish Stock Exchange over the period 2004-2011. Our results show that firms with busy directors offer low executive remuneration and present a low probability of a qualified audit opinion. Furthermore, the results indicate that firms with overlap directors exhibit a higher probability of receiving a qualified audit opinion. Additionally, we find evidence that the over commitment effects of busy and overlap directors are more evident for large firms. Overall, our findings suggest that busy (overlap) directors are beneficial (detrimental) to the monitoring capability of the board in the Spanish context.
Keywords: Board, Executive remuneration, Busy directors, Overlap directors, Audit opinion, earnings management
JEL Classification: G30, G32, G34, G38
Suggested Citation: Suggested Citation