Market Evidence on Investor Preference for Fewer Directorships

Keren Bar-Hava, Feng Gu, Baruch Lev*

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

7 Scopus citations


We examine investors' preference for directors serving on fewer versus more boards (busy directors) by measuring market reaction to busy directors' resignations at the companies that still keep these directors on the board. We find a positive reaction implying a preference for fewer directorships. The reaction is more positive when the need for the director's services is greater, when the resignation frees up more of the director's time, and when the director is of higher quality. Furthermore, we find that following their resignation, directors increase their board responsibilities/leadership at firms that still retain them and seek no board appointments elsewhere.

Original languageAmerican English
Pages (from-to)931-954
Number of pages24
JournalJournal of Financial and Quantitative Analysis
Issue number3
StatePublished - 2020

Bibliographical note

Funding Information:
*Bar-Hava,, the Hebrew University; Gu (corresponding author),, the State University of New York at Buffalo School of Management; and Lev,, New York University Stern School of Business. We thank Paul Malatesta (the editor), Robert Schonlau (the referee), and workshop participants at INSEAD, National University of Singapore, New York University, Tel Aviv University, the Hebrew University, and the 2014 Massachusetts Institute of Technology (MIT) Asia Conference in Accounting for helpful comments and suggestions. Gu thanks the financial support from the State University of New York at Buffalo.

Publisher Copyright:
Copyright © Michael G. Foster School of Business, University of Washington 2019.


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