The occurrence of corporate misconduct is a significant organizational event that adversely affects not only the firm’s performance but also its relationships with key stakeholders. Corporate directors are pivotal in the prevention and management of organizational misconduct. In this study, we focus on the phenomenon of “overboarded directors” (those serving on three or more corporate boards). Specifically, we propose that busy directors are less likely to be effective in monitoring environmental misconduct given the substantial cognitive overload and a limited sense of alertness associated with multiple directorships. We propose that firms with busy directors are more likely to have environmental misconduct if they are led by a powerful CEO, do not have a superior ethical reputation, or are experiencing financial distress. We examine these predictions using a panel data on environmental violations among S&P 500 firms (2007-2016). The findings suggest the presence of busy directors is associated with a high likelihood and frequency of environmental violation. This relationship is stronger among firms experiencing financial distress, and weaker among those with superior ethical reputation. Overall, this study sheds light on the organizational consequences of overboarded directors as it relates to environmental misconduct."
Abebe, Michael A.; Jones, Carla D.; and Acharya, Keshab, "Busy Directors and The Occurrence of Corporate Environmental Misconduct" (2020). Management Faculty Publications and Presentations. 16.
Academy of Management Proceedings