Journal of Financial Economics 109 (2013) 63–82

Contents lists available at SciVerse ScienceDirect

Journal of Financial Economics

journal homepage: www.elsevier.com/locate/jfec

Are busy boards detrimental?$

Laura Field a,n, Michelle Lowry a,n, Anahit Mkrtchyan b
a
Smeal College of Business, Pennsylvania State University, University Park, PA 16802, USA
b
D’Amore-McKim School of Business, Northeastern University, Boston, MA 02115, USA

a r t i c l e i n f o abstract

Article history: Busy directors have been widely criticized as being ineffective. However, we hypothesize
Received 25 July 2011 that busy directors offer advantages for many firms. While busy directors may be less
Received in revised form effective monitors, their experience and contacts arguably make them excellent advisors.
8 October 2012
Among IPO firms, which have minimal experience with public markets and likely rely
Accepted 7 November 2012
heavily on their directors for advising, we find busy boards to be common and to
Available online 13 February 2013
contribute positively to firm value. Moreover, these positive effects of busy boards
JEL classification: extend to all but the most established firms. Benefits are lowest among Forbes 500 firms,
G24 which likely require more monitoring than advising.
G34
& 2013 Elsevier B.V. All rights reserved.
K22

Keywords:
Corporate Governance
Board of Directors
Initial public offerings
Venture capital

1. Introduction I would focus on intelligence, experience, ethics and

personality. Board members who rank highly on those
‘‘‘If you want something done, ask a busy person.’ y I’m
dimensions are indeed very popular.’’ 1
not sure counting board seats is the key issue here.
—Christian Chabot, CEO, Tableau Software (private
$
company with a busy director on its board)
We thank Naveen Daniel, Jon Garfinkel, Robert Giannini, David
Haushalter, Peter Iliev, Dalida Kadyrzhanova, James Linck, Jared
The issue of ‘‘overboarded’’ directors (directors that
Williams, Xianming Zhou, and especially the referee, Jeffrey Coles, for
many helpful comments. We also thank participants of workshops at serve on several firms’ boards) has received attention in
George Mason University, Georgetown University, Pennsylvania State both the academic literature and the business press. Fich
University, Shanghai Advanced Institute of Finance, Shanghai University and Shivdasani (2006) find that firms with busy boards,
of Finance and Economics, Southern Methodist University, University of defined as those in which a majority of independent
Amsterdam, University of Iowa, University of Pittsburgh, University
of Washington, and Vanderbilt University as well as conference partici-
directors hold three or more directorships, have lower
pants at the 2011 Conference on Financial Economics and Accounting, market-to-book ratios, weaker profitability, and lower
the 2010 Financial Management Association Meeting, the 2010 City sensitivity of Chief Executive Officer (CEO) turnover to
University of Hong Kong International Conference on Corporate Finance firm performance. Core, Holthausen and Larcker (1999)
and Financial Markets, and the Fourth Annual Academic Conference on
find that CEOs of firms with busy directors are
Corporate Governance at Drexel University. We thank the Smeal
Research Grants Program for generously providing funding for this paid excessively, suggesting that busy boards may not
project. We thank Grant Farnsworth and Chad Heyne for excellent effectively monitor management. Consistent with these
research assistance.
n
Corresponding authors. Fax: þ 1 814 865 3362.
1
E-mail addresses: laurafield@psu.edu (L. Field), Web site response to article by Scott Austin, ‘‘Start-ups grumble
mlowry@psu.edu (M. Lowry). about directors too busy to help,’’ The Wall Street Journal, July 29, 2010.

0304-405X/$ - see front matter & 2013 Elsevier B.V. All rights reserved.
http://dx.doi.org/10.1016/j.jfineco.2013.02.004
64 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82
alleged disadvantages of busy boards, the National Asso-
ciation of Corporate Directors, the Council of Institutional
Investors, and Institutional Shareholder Services (2012),
have all recommended various limitations with respect to
the number of boards on which directors serve. Coincid-
ing with these recommendations, 74% of Standard and
Poor’s (S&P) 500 companies limit the number of corporate
directorships that their board members may hold.2
Although these recommendations and academic
research suggest that busy boards are detrimental to
firms, research thus far has focused on large, seasoned
firms [e.g., Fich and Shivdasani’s (2006) sample consists of
Forbes 500 firms]. As Coles, Daniel and Naveen (2008) and
Linck, Netter and Yang (2008) emphasize, ‘‘one-size-fits-
all’’ proposals lead to suboptimal outcomes for many
firms. Yet, Hermalin and Weisbach (2003) note that
research is scant on boards of directors of small entrepre-
neurial firms. Thus, we examine the effects of busy boards
for newly public firms, which we argue place very
different demands on their boards than do large, seasoned
firms. Newly public firms have no prior experience
navigating public markets, meaning they are likely to rely
heavily on their directors for contacts and for advice on a
variety of matters. We posit that busy directors are more
experienced and better connected, and therefore better
positioned, to assist firms along these dimensions.
Consistent with the idea that busy boards confer
benefits to newly public firms, we find that multiple
directorships are common among them. Forty-five per-
cent of directors in newly public venture-backed firms
serve on at least three boards, and 49% of these firms have
busy boards (i.e., at least half of all independent directors
serve on at least three boards). By contrast, Ferris,
Jagannathan and Pritchard (2003) find that only 6% of
Compustat firms have busy boards and that almost half of
all multiple directorships are held in Forbes 500 firms.
Given their evidence, Ferris, Jagannathan and Pritchard
(2003), p. 1091 conclude that ‘‘multiple directorships are
primarily a large-firm phenomenon.’’ Our finding that
multiple directorships are also common among newly
public venture-backed firms demonstrates that multiple
directorships are not solely a large-firm phenomenon.
Given the conventional wisdom that busy boards are
detrimental, it is puzzling why firms would choose to have
a busy board at the time of the IPO. Indeed, firms and
venture capitalists have incentives to implement optimal
governance policies that maximize firm value at the IPO,
and as a result, agency issues that may result in suboptimal
governance structures in seasoned firms are less likely to
be observed in IPO firms (Baker and Gompers, 2003; Field
and Karpoff, 2002). Thus, the high occurrence of busy
boards among IPO firms suggests that our current under-
standing of busy boards is incomplete. We posit that the
relatively high frequency of busy boards for newly public
firms may be driven by differences in IPO firms’ needs
relative to those of their seasoned counterparts. These
issues are illuminated below.
2
As reported by the 2011 Spencer Stuart Board Index survey:
/http://viewer.zmags.com/publication/69b85ba2#/69b85ba2/1S.
First, one of the most important differences between a
seasoned firm and a newly public firm is the degree of
management experience in navigating public markets.
Most managers of newly public firms have had little prior
experience managing relations with institutional inves-
tors, communicating with the media, interacting with
analysts, or even filing public statements with the
Securities and Exchange Commission (SEC). Also, consis-
tent with their rapid growth rates, many newly public
firms make acquisitions, issue debt, or raise public equity
for the first time soon after they go public (Celikyurt,
Sevilir and Shivadasani, 2010). Finally, high levels of
uncertainty and information asymmetry lead to a non-
trivial number of lawsuit filings. Because managers of
these firms have had little to no experience with such
issues, board members who can provide relevant advice
are of obvious value. Busy directors, almost by definition,
are likely to have had experience with the variety of
issues that public firms face, and busy directors are also
likely to have a wider network of contacts, which a
growing body of literature suggests is quite valuable
(see, e.g., Coles, Daniel and Naveen, 2012; Sørensen,
2007; Hellman and Puri, 2002; Hochberg, Ljungqvist and
Lu, 2007; Carpenter and Westphal, 2001; Cohen, Frazzini
and Malloy, 2008; Stuart and Yim, 2010; Ishii and Xuan,
2010). In sum, the advising benefits of busy directors are
likely greater for newly public firms than for more
mature firms.
Second, newly public firms’ demands for monitoring are
likely to differ from those of mature firms. Newly public
firms are characterized by high growth and uncertainty,
suggesting that they require more time from their direc-
tors. As highlighted by Fich and Shivdasani (2006), time is
the most pressing constraint for busy directors, and time
constraints can cause busy directors to be ineffective
monitors. However, for IPO firms, the demands for mon-
itoring from directors may be mitigated by the fact that
management of newly public firms typically owns a higher
percentage of the firm than their counterparts in mature
firms.3 To the extent that this higher ownership better
aligns management’s incentives with those of outside
investors, agency costs and the monitoring burden of the
board may be less severe in newly public firms.
Finally, Fama and Jensen (1983) suggest that director
busyness signals director quality: higher quality directors
are more frequently asked to serve on additional boards.
Similarly, Coles and Hoi (2003), Brickley, Linck and Coles
(1999), Bugeja, Rosa and Lee (2009), Gilson (1989, 1990),
Kaplan and Reishus (1990), and Fich and Shivdasani
(2007) provide further evidence that better directors are
asked to serve on greater numbers of boards.4 Taken
3
Officers and directors of IPO firms hold substantially more equity
than do officers and directors of seasoned firms: Boone, Field, Karpoff,
and Raheja (2007) show that right after the IPO, officers and directors
own 52% of their firm’s stock, compared to 16% for seasoned firms (Denis
and Sarin, 1999), while CEOs own 16% of their firms’ stock at the IPO,
compared to only 7% for seasoned firms (Denis and Sarin, 1999).
Moreover, 43% of all IPO CEOs are founders.
4
These papers look at directors who enforce stricter corporate
governance, who were better CEOs, who were involved with more
successful takeovers, or who were not associated with negative
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82
together, this evidence demonstrates that higher quality
directors are more sought after and that there should be a
positive relation between director quality and busyness.
Because IPO firms tend to be in emerging industries
where the supply of qualified directors is particularly
limited, we conjecture that a large number of these firms
may be chasing a relatively small number of qualified
directors. Such forces may result in a stronger relation
between director quality and busyness among IPO firms,
as compared to more mature firms.
In sum, the connections and experience of busy direc-
tors likely make them better advisors, but time con-
straints potentially cause them to be lower quality
monitors. We hypothesize that IPO firms’ demands for
advising exceed their demands for monitoring, and thus,
IPO firms will garner greater benefits from busy directors
than will seasoned firms. Indeed, in strong contrast to
prior findings for samples of mature firms, we find that
firms with busy boards enjoy higher market-to-book
valuations.
This positive relation between busy boards and market
value for newly public firms raises the question of why
more firms don’t have busy boards at the IPO. We posit
that the fact that only half of newly public firms have
busy boards at the IPO reflects differences between the
supply and demand for busy directors. First, busy direc-
tors who provide high-quality advising services are a
scarce commodity. Second, firms’ advising needs differ,
even at the IPO. Firms that will benefit most from busy
directors should be most likely to have busy boards, and
these firms will attract busy directors by offering them a
distribution of some of the rents, for example, through
higher share ownership or compensation. Consistent with
this supply and demand explanation, we find that newly
public firms with the highest demand for advising
services are most likely to have busy boards. Further, we
also find some evidence that busy directors own signifi-
cantly more shares than non-busy directors.5
To the extent that our findings on the benefits of
busyness truly reflect the unique demands that young
firms place on their boards, we would expect these
benefits to lessen over time as IPO firms make more
connections and gain more experience navigating public
markets. Results are consistent with this intuition. First,
the prevalence of busyness decreases as firms mature:
within our sample of IPO firms, 49% have busy boards at
the time of the IPO, 37% five years after the IPO, and 31%
ten years after the IPO. Consistent with this decrease in
the incidence of busyness, we also find that the benefits of
busyness decrease as firms mature.
(footnote continued)
performance such as litigation. They find that such directors have
greater opportunities to serve on other boards in the future. Further-
more, Perry and Peyer (2005) find that directors who are employed at
firms with fewer agency problems can enhance firm value by accepting
additional directorships.
5
Most firms do not provide formal compensation programs for
directors before the IPO. For those that do compensate directors, the
majority of compensation is in terms of option grants.
65
The results presented thus far for IPO firms contrast
sharply with Fich and Shivdasani (2006), which finds a
negative relation between board busyness and market
value for Forbes 500 firms.6 We conjecture that the well-
established firms that comprise Fich and Shivdasani’s
sample are particularly unlikely to benefit from busy
directors, as their demands for monitoring arguably out-
weigh their demands for advising. In sum, while IPO firms
are most likely to benefit from busy boards, Forbes 500
firms should be least likely to similarly benefit, and it is an
empirical question the extent to which broader samples
of mature firms would find busy boards beneficial.
To examine the effects of busy directors more broadly, we
turn to S&P 1500 firms. A number of conclusions emerge.
First, our findings corroborate the above predictions: the
relation between firm performance and board busyness is
significantly lower for Forbes 500 firms than for other S&P
1500 firms. Second, across the 1996–2009 time period and
after controlling for endogeneity, we find no evidence of a
negative relation between board busyness and firm perfor-
mance within any sample: the relation is significantly
positive across the broad sample of S&P 1500 firms and
insignificantly different from zero among Forbes 500 firms.
In sum, our results demonstrate that, for firms with
little experience in public markets, busy directors provide
a variety of benefits. Additionally, even among seasoned
firms, the benefits of busy boards likely outweigh the
costs for younger and less established firms. As firms
mature, their advising demands decrease and their mon-
itoring demands increase, such that the benefits of busy
directors tend to attenuate. Overall, our results challenge
the conventional wisdom that limiting multiple director-
ships will enhance firm value for many firms. Moreover,
our findings cast doubt on the empirical foundations for
statements by academics, regulators, listing entities, gov-
ernance and proxy advisors, and institutional investors
that busy boards represent bad boards.
This paper proceeds as follows. Section 2 describes our
sample and provides descriptive statistics. Section 3
examines the prevalence and characteristics of busy
directors. Section 4 focuses on the extent to which busy
boards contribute positively to firm value, both within
samples of IPO firms who tend to have high demands for
advising from the board and across samples of more
mature firms whose demands for advising have poten-
tially dissipated. Section 5 presents evidence on the
experience, qualifications, commitment level, and con-
nections of busy directors. Section 6 discusses robustness
analyses, and Section 7 concludes.
2. Sample and descriptive statistics
2.1. Sample
We use information from ThomsonOne Banker by Secu-
rities Data Corporation (SDC) to identify all venture-backed
6
In contrast, Ferris, Jagannathan and Pritchard (2003) find no
evidence that future performance is hurt by busy directors. However,
Fich and Shivdasani (2006) argue that this finding is driven by a lack of
power in their definition of busyness.
66 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82
firms incorporated in the U.S. that went public from 1996
through 2008. We focus on venture-backed IPOs because
venture capitalists (VCs) are particularly involved in the
corporate governance of the firm, meaning that the effects
of busyness will be particularly salient. In addition, our
sample enables us to examine the issue of busyness from
the perspectives of both the IPO firm and their VC backers.
We exclude IPOs by real estate investment trusts and
closed-end mutual funds, unit issues, limited partner-
ships, depositary issues, and IPOs with an offer price less
than $5. These criteria yield a sample of 1,331 venture-
backed IPOs.
Our analysis requires collecting data on the directors
of each of these firms. Thus, we search for prospectuses
filed with the Securities and Exchange Commission (SEC).
From these prospectuses, we hand-collect information on
board composition and corporate governance. For 232
firms, there is no prospectus filed with EDGAR. Our final
sample includes 1,099 venture-backed IPOs from 1996–
2008, with 5,747 directors serving on their boards.
We read the appropriate sections of the prospectus to
classify directors. We classify the director as an insider
if he/she is an employee of the company. All other
directors, including venture capital directors, are classi-
fied as independent.
In the description of each director, the prospectus lists
the company names of any other boards on which the
director sits. Because we are studying firms that were
recently private, we include both private and public firms
in our analysis of the number of directorships of each
board member. However, as with prior research, we do
not include directorships on the boards of charitable
organizations, universities, trusts, etc.7 Although many
prospectuses chronicle all directorships of each board
member by listing each firm name, without regard to
public or private status, other prospectuses state that the
director ‘‘also sits on the boards of several private com-
panies.’’ To be conservative, we count ‘‘several other
private firms’’ as two firms; thus, the total number of
boards is calculated as the number of companies specifi-
cally listed (including the particular IPO firm itself) plus
two if the director sits on ‘‘several other private firm
boards.’’ Consistent with prior literature (Fich and
Shivdasani, 2006; Core, Holthausen and Larcker, 1999;
Ferris, Jagannathan and Pritchard, 2003), we define a busy
director as a director who sits on the boards of three or
more firms.8 We define a busy board, similar to Fich
and Shivdasani (2006), as one that has 50% or more of
independent directors who are busy.
Other information we collect on each director includes
the director’s age and educational background, whether
7
In contrast, prior literature, which has focused on more established
firms, has only considered board seats on public firms. To the extent that
directors have a specialty in a particular type of firm, directorships in
other private firms are arguably more relevant for our sample.
8
In the robustness section of this paper, we consider a different
definition of busy, in the spirit of the recommendations of the National
Association of Corporate Directors (National Association of Corporate
Directors, 2011). Specifically, we define retired and venture capitalist
directors as busy if they serve on at least six boards. Results, discussed in
more detail in Section 6.4, are similar using this alternative measure.
the director is also chairman of the board, the number of
years the director has served on the board, whether the
director is a founder of the firm, and whether the director
is a member of the audit or compensation committee
(most firms do not provide information on the nominat-
ing and corporate governance committees until 2004). We
also collect data on shares owned by each director,
including shares owned by companies or VC firms with
which each director is associated. Finally, we collect
information on the CEO of each firm (including all
information described above for directors) and the firm’s
founding date from the IPO prospectus.
We merge these director data with other offer-specific
information from SDC (including, for example, the iden-
tity of the underwriters, offer price, offer date, etc.), with
stock price data from the Center for Research in Security
Prices (CRSP), and with financial data from Compustat.
We use data from the General Accounting Office on
earnings restatements, and data from the Stanford Secu-
rities Class Action Clearing House for lawsuit filings.
We download detailed data from Thomson Financial
on the venture capital firms that invested in each IPO and
measure venture capital quality similar to Nahata (2008).
Each VC firm is ranked by the total number of IPOs with
which it has been affiliated. In order to avoid a look-ahead
bias, the top 50 VC firms in each year are ranked based on
the number of companies they brought public over the
prior five years. Note that an IPO firm that received
funding from five different venture capitalists would be
counted as an IPO for each of these VC firms.
When possible, we also obtain data on this same set of
firms five and ten years after the IPO. For firms that went
public early enough in our sample period and did not
delist prior to the five- or ten-year mark, we read through
proxy statements to obtain data on the directors of the
firm, similar to that obtained at the time of the IPO (i.e.,
director age, director independence, number of boards on
which director serves, etc.). There are 490 firms at year
five with 2,725 directors and 204 firms at year ten with
1,228 directors.
Finally, we also obtain a sample of seasoned firms from
the RiskMetrics Directors Database from 1996–2009,
which covers the S&P 1500. We require these firms to
have Compustat data for firm accounting information. The
panel data set of RiskMetrics firms with Compustat data
consists of 14,449 firm-years over the 1996–2009 period.
2.2. Descriptive statistics
Panel A of Table 1 provides descriptive statistics on our
sample firms. Our firms are young, at an average age
of 7.6 years, consistent with prior studies of IPOs.
The average firm raised $71 million at the IPO with an
average initial return of 46% (19% median). On average,
directors (in aggregate) own 33% of the firm at the IPO.
Using the venture capital firm quality measures described
above, we find that 35% of our IPOs have at least one
board member from a top 25 VC firm. On average, our
firms have 6.8 directors. This is slightly higher than the
average 6.2 directors reported for venture-backed firms by
Baker and Gompers (2003) for IPOs in the 1978–1987 period,
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82 67

Table 1
Descriptive statistics.
The sample in Panel A consists of 1,099 venture-backed U.S. IPOs between 1996 and 2008. A firm with a busy board is one where at least half the
directors serve on three or more boards (including the IPO firm in question). A firm with a non-busy board is one where fewer than half the directors
serve on at least three boards. The sample in Panel B consists of 5,747 independent directors across 1,099 venture-backed IPOs between 1996 and 2008.
Of the 5,747 independent directors, 3,168 directors are venture capitalists (VC), and 2,579 directors are non-venture capitalists (non-VC). Asterisks
indicate whether the differences between non-VC and VC directors are significant: The symbols ***, **, and * denote significance at the 1%, 5%, and 10%
levels, respectively. See the Appendix for variable definitions.

Panel A: Descriptive statistics by firm

Mean Median

Firm age 7.6 6.0

Proceeds raised ($ million) 71.3 52.0
Initial return 46% 19%
Independent director ownership 33% 26%
IPOs with a director from top 25 VC 35% .
Board size 6.8 7.0
% Board independent 71% 71%

Panel B: Means by independent director

Full VC Non-VC
sample directors directors

Director is busy 45.1% 57.5% 30.0%***

# Boards director serves on 2.7 3.2 2.2***
Director is VC 55.1% . .
Director affiliated with top 25 VC 10.2% 18.6% .
Director age 50.2 47.7 53.4***
Director tenure with IPO firm 2.71 2.68 2.75
Director ownership 6.3% 10.2% 1.5%***
Director has Harvard or Stanford MBA 13.0% 18.6% 6.0%***
Director is chairman 6.4% 5.2% 7.9%***
Director on audit committee 49.0% 49.5% 48.3%
Director on compensation committee 47.8% 52.7% 41.8%***

and the average 6.2 directors reported by Boone, Field,
Karpoff and Raheja (2007) for IPOs between 1988–1992.
Thus, our later sample period (1996–2008) shows an increase
in board size for the average IPO firm, likely due to recent
Exchange requirements for more outsider-dominated boards.
For the average board in our sample, 71% of the directors are
independent. This compares with 62% for Boone, Field,
Karpoff and Raheja (2007) and 61% for venture-backed firms
in Baker and Gompers (2003), again consistent with recent
Exchange requirements for more outsider-dominated boards.
Panel B of Table 1 provides descriptive statistics for the
5,747 independent directors in the sample. Although our
sample includes only venture-backed IPOs, directors on these
firms’ boards include both venture capitalists and non-
venture capitalists. Approximately half (55%) of the directors
are venture capitalists, and about 10% come from one of the
top 25 venture firms. Comparing VC versus non-VC directors,
VC directors are more likely to be busy, they are younger, and
they own more shares in the IPO firm. VC directors are also
more likely to have an MBA degree from Stanford or
Harvard,9 less likely to serve as chairman of the board, and
more likely to serve on the compensation committee.
Many of the directors of IPO firms are busy: 45% of
directors serve on at least three firms’ boards. Moreover,
9
As discussed in more detail later, our focus on Harvard and
Stanford MBAs is based on the quality, geographic location, and alumni
profiles of these programs.
13% of all directors (not shown) serve on six or more boards.
On average, directors serve on 2.7 boards. The fact that so
many directors sit on multiple boards at the IPO provides
preliminary evidence that director busyness is a common
occurrence among newly public firms, a conjecture exam-
ined more directly in the next section. Although 58% of
venture capitalist directors serve on multiple boards, it is
notable that 30% of non-venture capitalist directors are also
busy. Thus, for IPO firms, director busyness is not solely a
venture capitalist phenomenon.
3. Prevalence and characteristics of busy directors
Baker and Gompers (2003), Field and Karpoff (2002),
and Easterbrook and Fischel (1991) note that firms under-
taking IPOs are more likely to choose value-maximizing
governance structures, since the costs of any suboptimal
governance structure will be borne by pre-IPO share-
holders. If busy boards lower firm value, firm principals
would have an incentive to avoid them at the IPO. Yet, we
do not observe firm principals avoiding busy boards at the
IPO: as shown in Panel A of Table 2, 49% of all IPO firms
have busy boards. Moreover, as shown in the subperiod
analysis, the preponderance of busy boards has remained
fairly constant over our entire sample period. We also find
that 37% of all busy directors join the board within two
years of the IPO and 15% join less than a year before the
IPO (not tabulated). If busy boards lowered firm value, we
would not expect firms to add busy directors as the IPO
68 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82

Table 2
Fraction of busy directors and firms with busy boards, by year.
The sample in Panel A consists of 1,099 venture-backed IPOs between 1996 and 2008. A firm with a busy board is one where at least half the directors serve
on three or more boards (including the IPO firm in question). A firm with a non-busy board is one where fewer than half the directors serve on at least three
boards. The sample in Panel B consists of 5,747 directors of 1,099 venture-backed IPOs between 1996 and 2008, divided by venture capital association and
board busyness. All reported numbers are averages. Asterisks indicate whether the differences between busy and non-busy directors are significant stratified
by venture capital backing: The symbols ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively. See the Appendix for variable definitions.

Panel A: Descriptive statistics by firm

Years # Firms going public % With busy boards

1996–99 574 49%

2000–03 289 48%
2004–08 236 46%
Total 1,099 49%

Panel B: Means by director busyness and venture capital affiliation

VC directors Non-VC directors

Busy (N¼ 1821) Non-busy (N¼ 1347) Busy (N¼ 773) Non-busy (N ¼ 1806)

# Boards director serves on 4.62 1.30*** 4.28 1.25***

Director affiliated with top 25 VC 24.5% 10.5%*** . .
Director age 48.41 46.66*** 55.46 52.52***
Director tenure with IPO firm 2.83 2.47*** 2.45 2.88***
Director ownership 11.5% 8.5%*** 1.4% 1.5%
Director has MBA from Stanford or Harvard 21.9% 14.4%*** 8.7% 4.9%***
Director is chairman 6.3% 3.8%*** 9.4% 7.3%*
Director on audit committee 51.3% 47.1%** 51.7% 46.8%*
Director on compensation committee 57.6% 46.2%*** 47.0% 39.5%***

approaches, yet they do. Thus, it is likely that insiders of
IPOs perceive busy directors as providing a net benefit.
Having established the prevalence of busy directors on
IPO firms’ boards, we now turn to the characteristics of
these busy directors. Since our sample includes both
venture and non-venture directors, a natural question is
whether the characteristics of busy and non-busy direc-
tors vary by VC affiliation. Thus, Panel B of Table 2
compares the characteristics of busy versus non-busy
directors, within both the samples of venture and
non-venture directors. We find that nearly all of the
differences between busy and non-busy directors are
similar across both VC subsamples. For example, non-
busy directors, whether venture capitalists or not, serve
on about 1.3 boards, on average, while busy directors,
whether venture capitalists or not, serve on between 4.3
and 4.6 boards, on average.
Further evidence in Panel B suggests that busy direc-
tors are more qualified and committed than their non-
busy counterparts. For example, busy directors are more
likely to serve as chairman of the board and more likely to
have an MBA degree from Stanford or Harvard. Consistent
with Ferris, Jagannathan and Pritchard (2003), we find
that they are also more likely to serve on the IPO’s audit
and compensation committees. All of these differences
between busy and non-busy directors are statistically
significant, for both the VC and non-VC directors.
Finally, among venture capitalist directors, Panel B of
Table 2 shows that one of the most striking differences
between busy and non-busy directors is in their tendency
to be associated with a top 25 VC firm: 24.5% of busy
VC directors are affiliated with top 25 VC firms, while
only 10.5% of non-busy VC directors are from top 25 VC
firms. Table 3 investigates the source of this marked
difference: does director busyness among top 25 VC firms
reflect a higher demand for their services combined with
a constraint on the number of available qualified partners,
or is the evidence more consistent with the most success-
ful VC firms perceiving busyness to be a positive rather
than a negative?
Since VC firms invest substantially in their portfolio
companies and also hold board seats on these companies’
boards (Barry, Muscarella, Peavy and Vetsuypens, 1990),
the number of board seats held by each director could
simply be a function of the total capital under manage-
ment, relative to the number of VC general partners. Total
capital under management is likely to change over time,
for example, as the availability of funding and the land-
scape of high-potential companies changes; VC firms may
not be able to hire qualified partners at an equivalent rate.
Finding board candidates who are sufficiently knowledge-
able about both the business and operational aspects of
these companies, as well as about the broader markets,
can be challenging. Thus, it is possible that venture
capitalist directors serve on multiple boards because of
resource constraints within their VC firms.
Alternatively, it is possible that certain venture capi-
talists are busy either because they have realized that
serving on multiple boards makes them more effective or
because they are better qualified and therefore in higher
demand (Fama and Jensen, 1983). As discussed earlier,
busy directors are likely to have wider networks of
contacts and more complete information on current
dynamics in the market, both of which help them to
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82 69

Table 3
Is director busyness driven by resource constraints?
This table presents descriptive statistics on the top 50 venture capital firms. Number of board seats held denotes the number of board seats held by venture
firms’ principals in 2008; capital under management is the total capital under management for each venture firm in 2008; number of venture principals
denotes the number of principals in the venture firm in 2008; capital per principal is the average capital managed by each principal in 2008, VC firm age is the
number of years since incorporation. Data are collected from Pratt’s Guides (1984–2002, 2003–2008). In Panel A, VC firms are sorted into quintiles based on the
capital per principal (as given by Pratt’s Guide in 2008). In Panel B, VC firms are sorted into quintiles based upon the number of firms they took public between
1996 and 2008. The symbols ***, **, and * denote significant difference in means of Quintile 1 and Quintile 5 at the 1%, 5%, and 10% levels, respectively.

Panel A: Is director busyness due to resource constraints?

Means for VC firm quintiles, based on capital per principal

Quintiles by # Of board seats held by Capital under management # Of venture Capital per principal VC firm age
‘‘capital per principal’’ VC principals principals

Quintile 1 (smallest) 3.838 $494,444,444 14.2 $39,599,993 31.7

Quintile 2 4.725 $1,577,944,444 14.4 $112,112,938 20.8
Quintile 3 4.722 $3,859,300,000 22.2 $175,332,177 23.8
Quintile 4 4.121 $5,226,600,000 20.6 $255,453,978 18.3
Quintile 5 (largest) 4.035 $8,063,011,111*** 13.8 $921,193,610*** 35.9

Panel B: Are highly ranked VCs more likely to be busy?

Means for VC firm quintiles, based on number of IPOs

Quintiles by venture # Of board seats held

capital IPO volume Capital under management # Of venture principals Capital per principal VC firm age
by VC principals

Quintile 1 (bottom) 3.72 $1,888,766,667 13.9 $123,900,545 18.9

Quintile 2 3.85 $2,040,211,111 13.2 $166,533,578 23.0
Quintile 3 4.49 $3,545,581,818 12.3 $530,268,224 26.2
Quintile 4 4.51 $5,473,777,778 25.4 $214,046,886 29.5
Quintile 5 (top) 4.70*** $5,741,440,000 17.8 $389,091,163* 32.7

better advise their portfolio companies (Larcker, So and
Wang, 2011). In addition, Table 2 suggests that busy
directors tend to be more experienced and more qualified.
To examine the effects of resource constraints within
VC firms, we collect data from Pratt’s Guides (1984–2002,
2003–2008) on the total capital under management and
the number of partners at each of the top 50 VC firms.
Panel A of Table 3 classifies these VC firms into quintiles
based on average capital managed by each partner of the
firm (i.e., total capital under management/ number of
partners). Quintile 1 represents those firms where part-
ners, on average, each manage the least amount of capital,
while quintile 5 represents those firms where partners
manage the most capital. As shown in Panel A, we find no
relation between capital managed per partner and num-
ber of board seats held per partner. Thus, results provide
no support for the conjecture that multiple directorships
among venture capitalists are due to resource constraints
that force VCs to serve on multiple boards.
Panel B of Table 3 examines the extent to which
director busyness reflects a choice that is positively
related to a person’s effectiveness as a director. The
success of a VC firm is largely determined by the number
of firms they eventually take public (Lerner, 1994). Thus,
we rank the top 50 VC firms based on the number of
companies taken public between 1993 and 2008, with
quintile 1 representing the lowest quality VC firms and
quintile 5 the highest quality firms. We then calculate the
number of board seats held by directors of VC firms in
each quintile. Looking at the first two columns of Panel B,
we observe a monotonic relation between VC quintile and
number of board seats held.10 Directors at the highest
quality VC firms hold an average of 4.7 board seats,
compared to 3.7 seats for VC firms in the lowest quintile.
The difference is significant at the 1% level. Conclusions
are similar when we look at medians (not shown). The
fact that higher ranked VC firms choose to have their
directors sit on more boards suggests that they perceive
busyness to be a value-increasing strategy.11
4. Multiple directorships and firm value
4.1. Busy boards and firm value in the IPO year
The finding that venture capitalists perceive busyness
to be beneficial contrasts strongly with Fich and
Shivdasani’s (2006) results that, within a sample of
mature firms, board busyness is detrimental. We conjec-
ture that the contrast is driven by the different demands
that IPO firms place on their boards. Compared to mature
firms, we contend that IPO firms have higher demands for
advising relative to monitoring. Thus, to the extent that
10
By definition, we only observe board seats held by those VC
partners that are associated with at least one firm that went public.
Thus, a VC partner who sits on the boards of five different firms, none of
which went public during our sample period, would not be captured.
11
As noted above, this relation may reflect either the higher
qualifications of venture capitalists at the higher ranked VC firms or
the appreciation among this subset of directors regarding the value of
busyness. Subsequent sections of the paper address such endogeneity
issues.
70 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82

Table 4
How do IPO firms with busy boards perform?
The sample consists of 1,045 venture-backed IPOs between 1996 and 2008 with Compustat data available. This table presents two-stage regressions where
each observation represents one firm. The first-stage regression models board busyness, which is a dummy variable equal to one if at least half of the
independent directors are busy. The first-stage regression includes two instrumental variables: (1) a dummy equal to one for firms headquartered within 100
km of the center of Silicon Valley, and (2) the number of independent directors over 60 years of age. The dependent variables in the second-stage regressions
are the market-to-book ratio (M/B) and net income/sales (ROS), both measured at the first fiscal year-end after the IPO. Accounting variables (from Compustat)
are measured at the first fiscal year-end after the IPO. See the Appendix for variable definitions. Year and industry fixed effects are included. Robust standard
errors are reported in parentheses. The symbols ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively.

2nd Stage dependent variable:

1st Stage:

Busy board M/B ROS

Busy board 5.154** (2.306) 23.382* (13.172)

Silicon Valley 0.106*** (0.038)
# Independent directors over 60 0.056*** (0.016)
Underwriter rank 0.002 (0.014) 0.265** (0.127)  0.910 (1.005)
Initial return 0.007 (0.023) 2.226*** (0.501)  0.374 (0.690)
# Months since IPO 0.005 (0.005)  0.332*** (0.052)  0.280 (0.282)
Ln(firm age)  0.006 (0.032)  0.911*** (0.305)  1.314 (1.329)
Ln(total assets) 0.029 (0.021)  0.564** (0.250) 1.039 (0.904)
R&D/sales 0.002 (0.006) 0.131*** (0.047)  4.072*** (0.970)
Depreciation/sales 0.056 (0.062)  2.902*** (0.650)  10.370*** (3.635)
ROS 0.001 (0.001)  0.007 (0.006)
Ln(# directorships of CEO) 0.097** (0.045) 0.378 (0.548)  3.815 (4.870)
Ln(CEO tenure)  0.022 (0.028) 0.370 (0.315) 2.047 (1.500)
Ln(board size)  0.200*** (0.069) 0.143 (0.777) 4.926 (4.440)
Board independence  0.012 (0.121)  1.982 (1.288)  5.169 (4.346)
Independent director ownership 0.143*** (0.052)  0.617 (0.707)  6.020* (3.129)
# Independent directors with Harvard or Stanford MBA 0.023 (0.104) 0.091 (1.352)  1.749 (3.666)
Affiliation with top 25 VC 0.098*** (0.034)  0.905*** (0.429)  3.820 (2.641)
% VC-affiliated independent directors 0.345*** (0.069) 0.293 (1.038)  7.090 (5.739)

Observations 1,045 1,045 1,045

1st-Stage test statistic:
Angrist-Pischke F-statistic 10.67
2nd-Stage test statistics:
F-statistic 6.52 3.75
p-Value for Hansen J-statistic 0.14 0.91

busy directors’ comparative advantage is in advising, we
expect busyness to be beneficial among IPO firms. This
would explain the tendency of the most successful ven-
ture capitalists to be busy, and it suggests that, for IPO
firms, firm performance should be increasing in busyness.
Here, we investigate this prediction: we examine the
effects of busy boards on firm performance, measured
by the market-to-book ratio (M/B) and return on sales
(ROS) in the first year after the IPO. While Fich and
Shivdasani find that, for mature firms, both of these
performance metrics are negatively related to board
busyness, we predict positive relations for IPO firms.
Early work, such as that done by Fich and Shivdasani,
analyzed the relation between firm value and board
busyness using an ordinary least squares (OLS) specifica-
tion. However, there is a potential endogeneity between
board busyness and firm performance. In our setting, for
example, busy directors are more likely to be from the top
VC firms. As Sørensen (2007) shows, top VC firms are able
to select higher quality firms ex ante. More generally,
directors who are more highly qualified may tend to join
higher quality firms. In sum, the firms with which busy
directors are associated may experience better perfor-
mance even absent the effects of these directors: that is, a
selection effect may spuriously cause firm performance to
be positively related to board busyness.
To account for this endogeneity, we use a two-stage
model in Table 4 to test the relation between board
busyness and firm performance. As noted by Roberts
and Whited (forthcoming) and Kennedy (2008), a proper
instrument will satisfy the relevance and exclusion con-
ditions. Our first instrument is motivated by the conjec-
ture that a busy venture capitalist is more likely to serve
on the board of a firm that is located within a close
geographic proximity, thereby minimizing time spent in
travel. Chen, Gompers, Kovner and Lerner (2010) show
that the largest concentration of VC offices (24% in 2005)
is located in the San Jose/San Francisco area and that more
than 60% of San Francisco/San Jose companies have their
VC investor in the same region. Thus, we define a dummy
variable equal to one if the IPO firm is located within
100 km (km) of the center of Silicon Valley: companies
headquartered in Silicon Valley would be more likely to
have busy directors, but there is little reason to expect
geographic location to be directly related to firm value,
e.g., to M/B.12 The second instrument is the number of
12
One concern is that investment opportunities may be correlated
with geographic location, thereby inducing a relation between location
and firm value. We conjecture that advancements in communications at
least somewhat mitigate this concern, as firms have more freedom
regarding location. However, we also address this concern empirically
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82
independent directors who are over 60 years of age. Older
directors are more likely to be retired and have fewer
time constraints, thereby leading them to serve on more
boards, i.e., to be busy. However, there is little reason to
expect director age to directly influence firm value.
As shown in the first-stage regression in Table 4, both
instrumental variables are significant in explaining board
busyness, and specification tests provide further evidence
that the equations are well-specified. Specifically, the
Angrist-Pischke (2009) F-statistic for weak identification
is 10.67, indicating that the instruments adequately
identify the model, and Hansen (1982) J-statistics are
not significant at conventional levels, meaning we cannot
reject the null that the instruments are uncorrelated with
the error terms and are correctly excluded from the
second-stage regressions.13 Control variables in the first-
stage regression indicate that firms with busy CEOs are
more likely to have busy boards (suggestive of a culture
that is open to directors serving on other boards), and
smaller boards are more likely to be busy. We also find a
strong relation between venture capital and busyness:
firms with a larger fraction of VC directors and those with
a director affiliated with a top 25 VC are more likely to be
busy. Finally, we find that total director ownership is
greater in firms with busy boards.
We use two metrics of firm performance to measure
the effects of busyness: M/B (the market-to-book ratio)
and ROS (net income/sales), both measured at the first
fiscal year-end following the IPO. As shown in the second-
stage regressions in Table 4, for newly public firms we
find significantly positive relations between board busy-
ness and both M/B and ROS. These results are in direct
contrast to Fich and Shivdasani’s (2006) findings of sig-
nificantly negative relations among Forbes 500 firms.
Our results demonstrate that among IPO firms, those
with busy boards are more highly valued. While the main
thesis of our paper is that busy boards are more valuable
to certain types of firms (i.e., to younger firms with less
experience navigating public markets), we also conjecture
that the net benefits of busyness vary across types of
directors. Busy directors offer the benefits of added
experience and a wider network of contacts, but at a cost
of potentially having less time to devote to the firm.
While all busy directors face the problems of time con-
straints, the quality of experience and depth of networks
are not equal across all busy directors.
In sum, we conjecture that the value of the connec-
tions that busy directors amass is greater among those
busy directors who are associated with top 25 VC firms
(see, e.g., Hochberg, Ljungqvist and Lu, 2007; Nahata,
2008). This leads to the prediction that director busyness
is more likely to add value among the subset of firms with
(footnote continued)
by including controls for investment opportunities (e.g., research and
development (R&D)/sales) and by including industry fixed effects.
Finally, the Hansen (1982) J-tests provide additional support for the
specification.
13
Specifically, the insignificance of the J-tests means it is unlikely
that only some of the instruments satisfy the exclusion condition while
others do not.
71
directors from these top 25 VC firms. Consistent with
predictions, we find that the positive relation between
board busyness and firm performance is concentrated
within the sample of IPOs where we surmise the benefits
are highest, i.e., IPOs backed by top 25 VCs (results not
tabulated).
4.2. Do the positive effects of busyness dissipate over the life
of the firm?
Our conjecture that the benefits of busy directors are
related to firms’ relative demands for advising versus
monitoring suggests that the positive relation between
board busyness and firm performance should attenuate as
firms mature. To examine this prediction directly, we
collect data on our original 1,099 venture-backed IPO
firms at two distinct future points in time: five and ten
years following the IPO. To be included in this post-IPO
sample, a firm must have gone public in the earlier years
of our original 1996–2008 sample (by year 2006 for the
five-year sample and by year 2001 for the ten-year
sample), and must not have been delisted or acquired
prior to the five- or ten-year point. Of the original 1,099
firms, we are able to follow 490 firms to year five and 204
firms to year ten. Of the original sample, 31% (46%) of
firms are acquired within five (ten) years, while 18% (27%)
delist for poor performance. We find no evidence that firm
outcome is related to board busyness at the time of
the IPO.
Table 5 presents evidence on the evolution of director
busyness after the IPO. The average board grows from 6.8
members at the IPO to 7.3 ten years later, and board
independence increases over time from 71% at the IPO to
78% ten years later. In contrast, board busyness declines
as the firm matures. While 49% of firms have busy boards
at the IPO, this figure drops to 31% ten years later.
Similarly, the fraction of directors who are busy drops
Table 5
Evolution of board composition.
The following table provides means of board characteristics for firms
at the IPO, for those still trading five years after the IPO, and for those
still trading ten years after the IPO. The Year 0 sample consists of 1,099
venture-backed IPOs with 5,747 directors between 1996 and 2008. At
year five, 490 firms are still trading, with 2,725 directors on their boards,
and at year ten, 204 firms are still trading with 1,228 directors on their
boards. % Firms with busy board represents the percentage of the sample
at each point in time in which at least half of all independent directors
serve on at least three boards. Board size is the average number of
directors serving on the board at each point in time. % Board indepen-
dent is the average fraction of independent directors as a percentage of
all directors. % Busy directors is the average fraction of independent
directors serving on at least three boards at each point in time.
Year 0 Year 5 Year 10
By firm:
% Firms with busy board 49% 37% 31%
Board size 6.8 7.0 7.3
% Board independent 71% 73% 78%
Observations 1,099 490 204
By director:
% Busy directors 45.2% 38.4% 35.4%
Observations 5,747 2,725 1,228
72 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82

from 45% at the IPO to 35% ten years later. This decrease
in busyness is consistent with these more mature firms
evaluating the benefits of busyness to be lower.
To determine the extent to which board busyness
affects firm value as firms mature, Table 6 shows two-
stage regressions of firm performance on board busyness
for the panel of firms with proxy statements available on
EDGAR five and ten years after the IPO. In the first stage,
we model board busyness (similar to the first-stage
regression reported in Table 4 for firms at the IPO). Our
instrumental variables include a dummy variable for the
presence of a busy board at the IPO and the number of
independent directors over 60 years of age. We expect
that firms with busy boards at the IPO are more likely to
have busy boards post-IPO (assuming some persistence in
firms’ benefits from busy directors), and we expect that
older directors are more likely to serve on multiple boards
(that is, they are more likely to be retired and thus have
fewer time constraints). There is little reason to expect
board busyness at year 0 to directly affect firm value at
year five or year ten, or to expect director age to directly
influence firm value. Both instruments are significantly
related to busyness, and the Angrist-Pischke F-statistic
and Hansen J-statistic indicate the regressions are well-
specified.
The substantially smaller coefficients on busy in
Table 6, compared to those in Table 4, are consistent with
the effects of busy on performance attenuating as firms
mature. In addition, we do not find that busyness is
significantly related to M/B or ROS at this later point in
the firms’ lifecycle (though the smaller sample sizes may
contribute to lower power in these regressions).
The fact that a substantial portion of IPO firms ceases
to exist as independent publicly traded companies within
the first few years after the IPO raises the question of
whether this difference in results stems from the different
stages of lifecycle, as we argue, or instead, to survivorship
bias-related issues. We first note that this concern is
somewhat mitigated by the fact that there is no signifi-
cant difference between the survival rate of firms that
have busy boards at the time of the IPO, compared to
those that do not have busy boards. While firms with busy
boards are slightly less likely to delist within the first five
years (14% vs. 17%), they are also slightly more likely to be
acquired (31% vs. 27%). Nevertheless, for robustness, we
re-estimate the Table 6 regressions controlling for both
sample selection and endogeneity. Specifically, following
Wooldridge (2010), we first estimate a probit model
where the dependent variable equals one if the firm
survives through year five and zero otherwise; explana-
tory variables include characteristics related to survival
(proceeds raised in the IPO, market capitalization at the
end of the first year, and underwriter rank) plus controls
used in Table 6. Using the residuals from this regression,

Table 6
Busy boards and firm performance in the years after the IPO.
The sample includes 490 (204) firms between 1996 and 2008 that were still trading five (ten) years after the IPO and with Compustat data available.
The first-stage regression models board busyness, which is a dummy variable equal to one if at least half of the independent directors are busy. The first-
stage regression includes two instrumental variables: (1) a dummy variable equal to one for firms with a busy board at the IPO, and (2) the number of
independent directors over 60 years of age. The dependent variables in the second-stage regressions are the market-to-book ratio (M/B) and net income/
sales (ROS), both measured at five and ten years after the IPO, respectively. The first-stage regression for M/B is shown; first-stage estimates for ROS are
qualitatively similar. Unless otherwise noted, accounting variables (from Compustat) are measured contemporaneous with the dependent variables. See
the Appendix for variable definitions. Year and industry fixed effects are included. Robust standard errors are reported in parentheses. The symbols ***, **,
and * denote significance at the 1%, 5%, and 10% levels, respectively.

2nd Stage dependent variable:

1st Stage for M/B:

Busy board M/B ROS

Busy board 0.046 (0.358) 0.636 (0.553)

Initial busy board (at IPO) 0.260*** (0.040)
# Independent directors over 60 0.026* (0.014)
Ln(total assets) 0.013 (0.016)  0.136*** (0.047) 0.257*** (0.071)
R&D/sales 0.005 (0.008)  0.009 (0.027)  0.509*** (0.174)
Depreciation/sales  0.041 (0.085)  0.407** (0.186)  6.221*** (0.816)
Sales growth 0.027 (0.032)  0.038 (0.071) 0.979*** (0.303)
ROS 0.002 (0.006)  0.022 (0.021)
M/Bt-1 (columns 1,2) ROSt-1 (column 3) 0.006 (0.015) 0.500*** (0.063) 0.143** (0.058)
M/Bt-2 (columns 1,2) ROSt-2 (column 3)  0.007 (0.010) 0.098*** (0.036)  0.019 (0.016)
Intangible assets/total assets  0.201* (0.110)  0.687*** (0.244)  0.068 (0.323)
Ln(# directorships of CEO) 0.034 (0.047) 0.038 (0.108)  0.226 (0.163)
Ln(CEO tenure) 0.008 (0.025) 0.101* (0.057)  0.036 (0.073)
Ln(board size)  0.261** (0.111) 0.509** (0.257)  0.945** (0.381)
Board independence 0.167 (0.249)  0.820 (0.666) 0.445 (0.764)
Independent director ownership 0.004 (0.033)  0.101*** (0.038) 0.034 (0.063)
Ten years post-IPO 0.040 (0.062)  0.094 (0.133)  0.117 (0.196)

Observations 590 590 604

1st-Stage test statistic:
Angrist-Pischke F-statistic 23.07
2nd-Stage test statistics:
F-statistic 14.18 38.26
p-Value for Hansen J-statistic 0.33 0.91
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82
we calculate the inverse Mill’s ratio and add this as an
additional explanatory variable in the second-stage
regression (which is similar to that reported in Table 6,
but estimated for the year-five cross-section of firms
only). Results (not tabulated) are similar to those reported
in Table 6, and the inverse Mill’s ratio is not significant at
conventional levels, further confirming that sample selec-
tion is not affecting results.
4.3. Effects of busyness for S&P 1500 firms
The finding that the positive effects of busyness
attenuate as newly public firms mature is consistent with
the proposition that firms’ demands for advising decrease
over time, while their demands for monitoring increase.
An interesting question is whether this proposition—that
the benefits of busyness are lower for more established
firms—holds more generally across a broader sample of
firms. To examine this issue, we compare the effects of
busyness across all S&P 1500 firms versus those firms that
comprise the Forbes 500. Specifically, we regress M/B and
ROS on board busyness, board busyness interacted with a
Forbes 500 dummy, and controls.
Earlier, we argued that the relation between board
busyness and firm value is likely endogenous for IPO firms.
Similarly, we expect that the relation may be endogenous
among mature firms. To capture this endogeneity, we model
board busyness using three instrumental variables: the
number of independent directors over 60 years of age, a
dummy variable equal to one for the prior presence of a
busy board, and a dummy variable for the presence of a
female director. We define the prior busy board dummy
based on board composition three years earlier, to capture
persistence in firms’ demands for busy directors while
allowing enough time for board membership to change.14
The choice of a female director instrument is motivated by
recent PricewaterhouseCoopers (PwC) and Spencer Stuart
surveys suggesting that female directors are likely to be in
high demand.15 The presence of an endogenous variable as
well as an endogenous variable interacted with an exogen-
ous variable results in two first-stage regressions: one for
the presence of a busy board, and a second for the presence
of a busy board  Forbes 500 dummy. In each of these first-
stage regressions, we include the three instruments and
each of these instruments interacted with the Forbes 500
dummy (see, e.g., Wooldridge, 2010, pp. 267–268). We focus
our discussion on the second-stage regressions of M/B
and ROS.
14
Bebchuk and Cohen (2005) show that 60% of firms in the
RiskMetrics database have staggered boards, most with three-year
terms.
15
The Spencer Stuart survey finds that while 44% of respondents say
they are looking for female directors, only 21% of new S&P directors in
2010 are female: http://content.spencerstuart.com/sswebsite/pdf/lib/
SSBI2010.pdf. The 2011 PWC survey: http://www.pwc.com/en_US/us/
corporate-governance/assets/annual-corporate-director-survey-2011.
pdf. Although the dummy variable for the presence of a female director
is a valid instrument for RiskMetrics firms, it is not significantly related
to busyness within IPO firms and therefore is not a valid instrument for
this sample. This is potentially driven by the fact that few directors of
IPO firms are female (only 5% of directors at the IPO are female).
73
Results in Table 7 show a significantly positive relation
between board busyness and M/B for S&P 1500 firms: the
coefficient on busy board is 0.253 and is significant at the
1% level. This result is striking and calls into question the
calls for regulatory limits on directorships that have been
proposed by the NACD and ISS, as well as the self-imposed
limits of a majority of S&P 500 companies. We conjecture
that the dichotomy between our results and conclusions
in prior literature is partly due to a difference in samples.
Prior literature such as Fich and Shivdasani (2006) has
focused on Forbes 500 firms, and it is exactly these types
of very well-established firms that we expect to be least
likely to benefit from busy directors. Therefore, we stra-
tify our sample of S&P 1500 firms by membership in the
Forbes 500. Consistent with expectations, the coefficient
on the interaction term, Busy  Forbes 500, is significantly
negative in the M/B regression.
To shed further light on whether the effects of busyness
on M/B decline as firms mature and become more estab-
lished, we also examine the relation between busyness and
M/B for younger versus older S&P 1500 firms. Consistent
with expectations, we find that the positive relation between
busyness and M/B is highest among young S&P 1500 firms,
those under five years of age (results not tabulated). For ROS,
we find no significant relation with board busyness for
subgroups or for the sample as a whole.
In sum, our findings highlight the extent to which the
effects of busy boards vary across firms at different points
in their lifecycle. Firms such as those in the Forbes 500 are
likely to have large networks of connections, suggesting
that the connectedness of busy directors would be less
advantageous to them. At the same time, the complexity
and lower levels of managerial ownership among such
firms might lead them to require more monitoring, which,
due to time constraints, busy directors are arguably less
equipped to provide. Our results suggest that for younger
and less established firms, the benefits of busyness out-
weigh the costs, but for more established firms the costs
are likely to outweigh the benefits.
4.4. Contrast with prior literature
Our results show a positive relation between board
busyness and both M/B and ROS, which contrasts with the
negative relation found in prior literature, for example, Fich
and Shivdasani (2006). Fich and Shivdasani model an OLS
specification for Forbes 500 firms over the period 1989 to
1995, without an endogeneity correction.16 In an effort to
determine the source of the differing results, we estimate
specifications similar to this earlier paper, using OLS and firm
fixed effects to examine the relation between busyness and
both M/B and ROS. Regressions are estimated on the sample
of Forbes 500 firms and also on the broader sample of S&P
1500 firms covered by RiskMetrics; both samples cover the
1996–2009 period, as we do not have available data on the
16
Cashman, Gillan, and Jun (2012) examine this relation among S&P
1500 firms over a more recent sample period and find an insignificant
relation, but similar to Fich and Shivdasani, they do not correct for
endogeneity. Within our sample, a Hausman test rejects the null of no
endogeneity with a p-value of 0.014.
74 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82

Table 7
Busy boards and firm performance, S&P 1500 firms.
The sample consists of firms listed in the RiskMetrics database over the period 1996–2009. This table presents two-stage regressions where each
observation represents one firm year. The first-stage regressions model board busyness and board busyness interacted with the Forbes 500. Board
busyness is a dummy variable equal to one if at least half of the independent directors are busy, and Forbes is a dummy variable equal to one if a firm
belongs to the Forbes 500 in 2002. The first-stage regressions include three instrumental variables: (1) a dummy variable that equals one if the firm’s
board was busy three years ago, (2) the percentage of independent directors over 60 years of age, and (3) a dummy variable that equals one if at least one
independent director is female, plus interactions of each instrumental variable with the Forbes dummy. The dependent variables in the second-stage
regressions are: the market-to-book ratio (M/B) and net income/sales (ROS), both measured at each fiscal year-end, 1996–2009. First-stage regressions
for M/B are shown; first-stage estimates for ROS are qualitatively similar. Unless otherwise noted, accounting variables (from Compustat) are measured
contemporaneous with the dependent variables. See the Appendix for other variable definitions. Year and industry fixed effects are included. Robust
standard errors, clustered by firm, are reported in parentheses. The symbols ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively.

1st Stage for M/B: 2nd Stage dependent variable:

Busy board Busy  Forbes M/B ROS

Busy board 0.253*** (0.077)  0.004 (0.022)

Busy board  Forbes 500  0.228** (0.100)  0.033 (0.026)
Busy boardt-3 0.291*** (0.025)  0.009** (0.004)
# Independent directors over 60 0.018*** (0.003) 0.005*** (0.001)
Female independent director 0.002 (0.011)  0.008* (0.004)
Busyt-3  Forbes 500 0.008 (0.036) 0.321*** (0.027)
# Over 60  Forbes 500  0.003 (0.005) 0.003 (0.004)
Female  Forbes 500 0.094*** (0.027) 0.098*** (0.026)
Forbes 500  0.032 (0.031) 0.074** (0.029) 0.195*** (0.031) 0.011 (0.009)
Ln(total assets) 0.052*** (0.006) 0.025*** (0.004)  0.064*** (0.009) 0.009*** (0.003)
R&D/sales 0.142 (0.098)  0.023 (0.054) 0.341* (0.198)  0.587*** (0.108)
Depreciation/sales  0.146 (0.113)  0.190** (0.079)  0.527** (0.227)  0.817*** (0.185)
Sales growth  0.041** (0.018)  0.000 (0.012) 0.078* (0.045) 0.094*** (0.018)
Lag(sales growth) 0.001 (0.012) 0.007 (0.007)  0.074** (0.031)  0.035** (0.014)
ROS  0.107*** (0.032)  0.037** (0.017) 0.258*** (0.070)
M/Bt-1 (columns 1,2,3) ROSt-1 (column 4) 0.008 (0.006) 0.008* (0.004) 0.590*** (0.022) 0.586*** (0.049)
M/Bt-2 (columns 1,2,3) ROSt-2 (column 4)  0.000 (0.005)  0.001 (0.003) 0.112*** (0.019) 0.040 (0.027)
Intangible assets/total assets 0.022 (0.034)  0.022 (0.021)  0.332*** (0.046)  0.028** (0.012)
Ln(# directorships of CEO) 0.053*** (0.012) 0.018** (0.009)  0.021 (0.015) 0.005 (0.004)
Ln(CEO tenure)  0.020*** (0.005)  0.007* (0.004)  0.000 (0.008) 0.001 (0.002)
Ln(board size)  0.136*** (0.026)  0.032* (0.017) 0.001 (0.031)  0.009 (0.010)
Board independence  0.031 (0.035) 0.032 (0.022) 0.034 (0.049)  0.008 (0.012)
Independent director ownership  0.012* (0.006)  0.004 (0.004)  0.010 (0.009)  0.005* (0.003)

Observations 10,159 10,159 10,159 10,159

1st-Stage test statistic:
Angrist-Pischke F-statistic 39.72 41.59
2nd-Stage test statistics:
F-statistic 245.40 42.60
p-Value for Hansen J-statistic 0.29 0.46

earlier period covered by Fich and Shivdasani. Notably, we
are unable to replicate the significantly negative relation
between M/B and board busyness within any subsample. We
surmise that this is due to differences in sample period and
an increased awareness of the importance of attentive
directors.
In sum, the positive relation we find between firm M/B
and board busyness differs from the results of Fich and
Shivdasani for three reasons: a focus on a broader sample
of firms, the correction for endogeneity, and a more recent
sample period.
5. Experience and qualifications of busy directors
The findings that busy boards are beneficial to a broad
group of firms and in particular to younger, less estab-
lished firms raise questions regarding the precise benefits
they provide. This section delves into this issue by
identifying the characteristics of busy directors that
enable them to contribute positively to firm value in
particularly young firms. Specifically, we focus on the
experience, the qualifications, the level of commitment,
and the connections of busy directors of newly public
firms, as compared to their non-busy counterparts.
5.1. Experience of busy directors
For firms about to go public, having a director on the
board who has had prior experience with an IPO can be
invaluable. We conjecture that such directors will be
particularly popular and that directors with prior IPO
experience are likely to be busy. Table 8 provides strong
evidence consistent with this conjecture. To measure
directors’ experience, for each of the 5,747 directors in
our sample (serving on a total of 1,099 venture-backed
IPOs’ boards), we tabulate whether the director has served
on a prior IPO within our sample. The last line of Table 8
shows that about 21% of our directors have served on at
least one prior IPO’s board, but the frequency of this prior
experience is substantially higher among busy directors.
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82 75

Table 8 with the firm have more specialized knowledge. Similarly,

Are busy directors more experienced? older directors are likely to have more experience. Direc-
The sample consists of 5,747 directors across 1,099 venture-backed
tors that are associated with top 25 VC firms are pre-
IPOs between 1996 and 2008. For each director, we calculate the
number of previous IPOs (within our sample) that each director has sumably more skilled and/or more experienced. Finally,
been associated with. Directors are classified as having been on the our focus on MBAs from Harvard and Stanford is based on
board of 0, 1, 2, 3, 4, or Z 5 previous IPOs (within our sample). The the perception that these are continually two of the
symbols ***, **, and * denote significance for the difference of means for highest ranked MBA programs, the fact that they are
busy versus non-busy directors at the 1%, 5%, and 10% levels,
respectively.
geographically located in regions with substantial num-
bers of start-up companies, and the profiles of their
# Prior All directors VC directors Non-VC directors alumni, which suggest that graduates from these pro-
IPOs
grams may be most likely to maximize networking
Busy Non-busy Busy Non-busy
potential (see, e.g., Hochberg, Ljungqvist and Lu, 2007).
1 12.2% 21.4% 11.1% 13.6% 3.1% Model 1 of Table 9 provides strong evidence that busy
2 4.4% 10.2% 3.2% 2.2% 0.3%
directors are more experienced and more qualified: con-
3 2.3% 6.3% 1.0% 0.4% 0.1%
4 1.1% 3.0% 0.3% 0.4% 0.1% trolling for VC connections, busy directors are more likely
Z5 0.9% 2.6% 0.4% 0.0% 0.0% associated with a top VC firm, they are older, and they are
more likely to have earned an MBA from Harvard or
Z 1 Prior IPOs 20.9% 43.5% 16.0% 16.6% 3.6%
Stanford. In economic terms, controlling for other factors,
(t-stat¼ (t-stat ¼
17.2***) 9.3***) a VC director is three times more likely to be busy than a
non-VC director, and a highly ranked VC director is eight
times more likely to be busy. Directors from Stanford and
When we bifurcate our sample by VC affiliation and Harvard are 1.9 times and 1.6 times more likely to be
director busyness, we note that 44% of busy VC directors busy, respectively.17 Finally, a one standard deviation
have served on at least one prior IPO’s board, compared to increase in director age leads to a 1.4 times higher like-
only 16% of non-busy VC directors (the difference is lihood of being busy. Results (not tabulated) indicate that
statistically significant at the 1% level). Within the sample these relations between director qualifications and busy-
of non-VC directors, we also find significant differences in ness hold for both VC and non-VC directors.
prior IPO experience: 17% of busy directors have served Thus far, we have shown that busy directors are more
on at least one prior IPO’s board compared to only 4% of experienced and more qualified than non-busy directors.
non-busy directors (the difference is similarly statistically However, one common complaint about busy directors is
significant at the 1% level). that they are too overextended to adequately engage with
One concern with our measure of prior IPO board the firm. Experience and qualification can be thought of as
experience is that we only observe directorships within necessary but not sufficient for a director to be successful.
our sample (so that earlier in the sample period, we It is essential that the director also be committed to the
would observe fewer directorships of prior IPOs). Thus, firm. This can require a substantial time commitment: the
we also examine the prior IPOs of directors on a year-by- 2009 PWC Annual Corporate Directors Survey finds that
year basis (results not tabulated). In each year of our the average director spends 20 h per month on each
sample period, we find that busy directors have served on directorship.18 To understand the extent of busy directors’
significantly more prior boards than non-busy directors, commitment to their firms, we examine both directors’
consistent with the notion that busy directors are more monetary and time commitments to the firm. Monetary
experienced. commitment is measured in terms of ownership in the
firm, and time commitment is measured in terms of
5.2. Qualifications and commitment level of busy directors membership on subcommittees, the number of board
meetings held, and attendance at these meetings.
In addition to prior experience, the value of a director It is well-known that VC firms typically own shares in
is also based on his qualifications and commitment level. the firms they take public and that venture capitalists
Table 9 examines the qualifications and level of commit- take board positions so they can properly monitor their
ment of busy directors. Model 1 focuses on director capital. If busy directors are too time-constrained to
qualifications, and Models 2, 3, and 4 focus on director effectively monitor and advise their firms, they may
commitment level. rationally put less of their money behind the firms as
In Model 1 of Table 9, we estimate a logit regression of well. In this case, busy directors’ incentives would be less
director busyness on seven measures of director experi- aligned with those of shareholders. To examine this issue,
ence and qualifications. The dependent variable is a we regress director ownership on director busyness plus
dummy that equals one if a director serves on three or our various control variables of director characteristics.
more boards, and zero otherwise. The independent vari- As shown in Model 2 of Table 9, busy directors own
ables include director age, tenure with the firm going more shares in the IPO firms on whose boards they serve,
public, whether the director is associated with a VC firm,
whether the director is from a top 25 VC firm, whether 17
Economic significance levels are based on odds ratios and
the director is chairman of the board, and whether the marginal effects, which are not tabulated.
director has an MBA degree from Harvard or Stanford 18
See http://www.pwc.com/en_US/us/corporate-governance/assets
University. We surmise that directors with longer tenure /what-directors-think-2009-report.pdf.
76 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82

Table 9
Are busy directors more qualified and committed?
The sample consists of 5,747 directors across 1,099 venture-backed IPOs between 1996 and 2008. This table presents four different logit regressions
where each observation represents a director. In Model 1, the dependent variable equals one if a director serves on three or more boards, zero otherwise.
In Model 2, the dependent variable is share ownership of each director, including shares of beneficial ownership, measured at the closing of the IPO. In
Model 3, the dependent variable equals one if the director is a member of the IPO firm’s audit committee, zero otherwise. In Model 4, the dependent
variable equals one if the director is a member of the IPO firm’s compensation committee, zero otherwise. See the Appendix for variable definitions.
Robust standard errors, clustered by firm, are reported in parentheses. The symbols ***, **, and * denote significance at the 1%, 5%, and 10% levels,
respectively.

Dependent variable:

Model 1: Busy director Model 2: Director share Model 3: Director on audit Model 4: Director on compensation
(dummy) ownership comm. (dummy) comm. (dummy)

Busy director 0.016*** (0.003) 0.17*** (0.06) 0.33*** (0.06)

Director is VC 1.08*** (0.06) 0.066*** (0.004)  0.02 (0.06) 0.25*** (0.06)
Affiliation with top 1.09*** (0.11) 0.049*** (0.007)  0.04 (0.09) 0.31*** (0.10)
25 VC
Director age 1.41*** (0.16)  0.074*** (0.007) 0.20 (0.14) 0.03 (0.14)
Director tenure with 0.04 (0.04) 0.003*** (0.002)  0.04 (0.04) 0.40*** (0.04)
IPO firm
Director is chairman 0.32*** (0.12)  0.010* (0.005) 0.34** (0.12) 0.12 (0.12)
Director has Harvard 0.51*** (0.11)  0.000 (0.005) 0.33*** (0.10) 0.24** (0.10)
MBA
Director has Stanford 0.66*** (0.14) 0.029*** (0.007)  0.72*** (0.12) 0.14 (0.11)
MBA
Intercept  6.58*** (0.63) 0.299*** (0.027)  0.84 (0.56)  1.00 (0.56)

Adjusted R2 0.09 0.21 0.01 0.03

Observations 5,747 5,747 5,747 5,747

relative to non-busy directors. In economic terms, while
the average director holds 6.3% of the firm, busy directors
own 7.9% (6.3þ1.6, the regression coefficient on busy
director), which represents 25% more.19 This evidence
suggests that busy directors have a higher commitment
in terms of share ownership to the IPO firms on whose
boards they serve, compared to their non-busy counter-
parts. It is also consistent with the notion that busy
directors receive some of the rents from superior advising
capabilities in the form of higher share ownership. (Most
firms do not provide formal compensation programs for
directors before the IPO. For those that do compensate
directors, the majority of compensation is in terms of
option grants.)
Next, we examine the time commitment of busy
directors. If busy directors are spread too thinly, they
may be less willing to meet frequently. This suggests that
boards dominated by busy directors, i.e., firms with busy
boards, would meet less frequently. Alternatively, it is
possible that busy directors do not have the power to
control the number of times the board meets each year:
rather, the time constraints of these busy directors means
that they would be more likely to miss meetings, i.e., to
have poorer attendance records. On both counts, we find
that busy boards are as committed as non-busy boards
(results not tabulated). Busy boards meet an average 8.3
times per year, compared to 8.1 times for non-busy
boards (difference not significant). Additionally, busy
directors are as likely to attend meetings as their non-
busy counterparts. These results do not support the
contention that busy directors are overextended and shirk
on their responsibilities.
As a final measure of director commitment, we exam-
ine service on board subcommittees. If busy directors are
overcommitted, they may choose not to serve on sub-
committees. Models 3 and 4 of Table 9 present two logit
regressions (by director), in which director subcommittee
membership is the dependent variable. In Model 3, the
dependent variable equals one if the director is a member
of the audit committee, zero otherwise. Analogously,
in Model 4 the dependent variable equals one if the
director is a member of the compensation committee,
zero otherwise.
We find that busy directors are significantly more
likely to serve on the audit and compensation commit-
tees, respectively. A busy director is 1.2 times more likely
to serve on the audit committee and 1.4 times more likely
to serve on the compensation committee than a non-busy
director. Notably, these effects are after controlling for
various metrics of directors’ qualification and experience.
These results do not support the contention that busy
directors are spread too thinly and are less committed to
their firms. Subsample regressions (not tabulated) show
that the positive relation between busyness and member-
ship on the compensation committee is similar across
both VC and non-VC directors; the audit committee
results are stronger in the VC subsample.
5.3. Connectedness of busy directors

19
Results (not tabulated) indicate that this relation is concentrated We have surmised that busy directors are superior to
within VC directors. non-busy directors in terms of the connections they can
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82
offer to the firms on whose boards they serve. As a further
step toward understanding the advising role played by
directors, we examine whether busy directors affect the
quality of the underwriter chosen for the IPO. A potential
benefit of directors sitting on multiple boards is that they
can provide important networking connections for IPO
firms. We postulate that one important connection could
be to highly ranked underwriters. As is well-documented
in the literature, the IPO underwriter can be important to
the success of the offering (Carter and Manaster, 1990;
Carter, Dark and Singh, 1998), both in the initial selling
period (Aggarwal, 2000) and in receiving analyst follow-
ing after the IPO (Krigman, Shaw and Womack, 2001;
Michaely and Womack, 1999). Thus, we hypothesize that
busy directors, in their roles as advisors to the firm, may
provide networking capabilities, such that firms with
busy boards are taken public by more highly ranked
underwriters.
We find a significantly positive relation at the 1% level
between underwriter rank and the presence of a busy
board, after controlling for endogeneity (results not tabu-
lated). In economic terms, underwriter rank is 20% higher
for firms with busy boards. The finding that busy directors
help firms connect with higher ranked IPO underwriters is
consistent with our earlier evidence showing that busy
directors are more likely to have been involved with a
previous IPO. This prior experience increases directors’
opportunities to develop connections and provide more
networking benefits.
5.4. Board busyness and the demand for advising
Having established the attributes of busy directors that
enable them to effectively increase firm value in newly
public firms, we now consider more deeply the types of
these firms that will likely benefit most from busy
directors. Specifically, we examine cross-sectional rela-
tions between firm busyness and firm-specific attributes
arguably related to demand for advising. In addition, our
ability to follow these firms after the IPO enables us to
explore the evolution of the demand for advising.
Table 10 focuses on cross-sectional differences in demand
for advising. Some IPO firms have been established for longer
Table 10
Demands for advising at the IPO and beyond.
The sample consists of 1,099 venture-backed IPOs between 1996 and
2008, with 490 of these firms still trading five years later. The left three
columns show firm busyness at the IPO and at year five for firms by
quartiles, based upon firm age at each point in time. The right three columns
show firm busyness at the IPO and at year five for firms by quartiles, based
upon the level of R&D/sales at each point in time. Age and R&D/sales are
measured in the year before the IPO and at the beginning of year five. The
symbols ***, **, and * denote significant difference between quartile 1 and
quartile 5 at the 1%, 5%, and 10% levels, respectively.
Firm age % Busy % Busy at R&D/sales % Busy % Busy at
quartile at IPO year 5 quartile at IPO year 5
1 (Young) 51.5% 40.0% 1 (Low) 44.8% 28.7%
2 53.4% 40.3% 2 45.8% 40.6%
3 50.9% 43.9% 3 48.0% 37.6%
4 (Old) 37.8%*** 26.2%** 4 (High) 56.4%*** 49.5%***
77
periods of time prior to the IPO, suggesting that they have
more relevant experience and connections than their younger
counterparts. These older firms arguably have a lower
demand for advising, suggesting that they would benefit less
from busy directors. The left-hand columns of Table 10
provide support for this conjecture. We place all IPO firms
into quartiles based on firm age at the time of the IPO, and
we calculate the percentage of firms with busy boards within
each quartile. We find that older firms are significantly less
likely to have busy boards: 38% of firms in the oldest quartile
have busy boards at the time of the IPO, compared to 52% of
firms in the youngest quartile. Moreover, when we repeat
this exercise at year five (stratifying based on age and looking
at the incidence of busyness across quartiles), we find that
busyness has decreased within each age quartile, but it
continues to be the case that younger firms are significantly
more likely to have busy boards.
As an alternative metric of demand for advising, we also
divide firms into quartiles based on the ratio of R&D/sales.
Firms with greater R&D expenditures are arguably subject to
more uncertainty and are at the forefront of technology; we
expect that the advising services and connections of busy
directors can be particularly helpful for such firms. Consistent
with this conjecture, the right-most columns of Table 10
show that 45% of firms in the lowest R&D/sales quartile have
busy boards at the time of the IPO, compared to 56% of firms
in the highest R&D/sales quartile. Similar differences continue
to hold at year five, with the incidence of busyness being
significantly higher among the most R&D-intensive firms.
Overall, these results suggest that firms with the greatest
need for advising are more likely to include busy directors on
their boards.
6. Robustness
6.1. Announcement returns for busy director departures to
address endogeneity concerns
As noted earlier, our M/B regressions suffer from a
potential endogeneity problem. As shown in Tables 4, 6 and
7, we estimated all M/B and ROA regressions using two-stage
least squares (2SLS) in an attempt to control for such
endogeneity. In all cases, we confirmed the validity of the
inclusion restriction using the Angrist-Pischke F-statistic and
of the exclusion restriction using the Hansen J-statistic. We
also include both industry and calendar-year fixed effects
and, in the case of mature firms, lagged dependent variables
(M/B or ROS) as additional controls for the underlying
economic environment, thus lessening any endogeneity bias.
However, Demsetz and Lehn (1985) and Coles,
Lemmon and Meschke (2012) suggest that this set of
approaches may not be sufficient to adequately control
for endogeneity. We thus perform two independent
robustness checks of the effects of endogeneity (absent
a natural experiment where busy and non-busy directors
are randomly assigned to firms). Specifically, we conduct
an event study of the market reaction to director depar-
tures, and we examine differences in post-IPO returns
conditional on board busyness.
Our event study analysis is based on the premise that if
busy directors were detrimental to firm value, we would
78 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82

expect a higher cumulative announcement return (CAR) Table 11

surrounding the announcement of their departure, relative Are busy directors poor monitors?
Are busy directors poor monitors?The sample consists of 5,747
to the departure of non-busy directors. Among the director
directors across 1,099 venture-backed IPOs between 1996 and 2008.
departures for which we found an announcement, we find no Panel A presents the proportion of firms that were delisted or conducted
evidence to support this prediction: CARs are insignificantly acquisitions within three years of going public, stratified by the presence
different between busy versus non-busy director departure of a busy board. Panel B presents the proportion of firms that have
announcements (not tabulated). Results are robust to con- restated their earnings or were sued within three years of going public,
stratified by the presence of a busy director on audit committee. Panel C
trolling for confounding events and to whether or not a presents mean and median CEO compensation, stratified by the presence
replacement director was announced at the same time. of a busy director on compensation committee. The symbols ***, **, and *
Additionally, for the subsample of cases where a director’s denote significance at the 1%, 5%, and 10% levels, respectively.
departure causes a firm to transition from having a busy
Panel A: Are firms with busy boards more likely to delist or engage
board to a non-busy board, we find an insignificant average
in value-decreasing acquisitions?
CAR. The event study evidence is consistent with our 2SLS
analysis: there is no evidence that the market views busyness Busy Non-busy
as detrimental. board board
We have also estimated four-factor calendar portfolio
% Firms delisted within 3 years 8.0% 9.2%
post-IPO returns for firms with and without busy boards % Firms conducting acquisition within 3 58.5% 53.2%*
(see, e.g., Lyon, Barber and Tsai, 1999; Fama and French, years
1993; Carhart, 1997). We form three portfolios: a portfo- Average acquisition announcement CAR 0.61% 0.96%
lio of busy firms, a portfolio of non-busy firms, and a (  1,1)
portfolio which is long busy firms and short non-busy
firms. Portfolio returns are measured by calendar month, Panel B: Are firms with busy directors on the audit committee more
for 12 months post-IPO. Because returns are risk-adjusted likely to be sued or to restate earnings?

and forward-looking (i.e., measured after the observation Busy director on audit No busy directors on
of board busyness), they should not be subject to endo- committee audit committee
geneity concerns. Similar to the results on M/B reported in
Table 4, we find that newly public firms with busy boards Firm sued 8.56% 11.15%
Firm sued, case 6.17% 7.87%
outperform those without busy boards in the 12 months
not dismissed
post-IPO, and the relation is statistically significant among Firm restates 4.91% 5.57%
firms backed by a top 25 VC (results not tabulated). earnings
In sum, employing a variety of methods to address any
potential endogeneity, we find no evidence in any test Panel C: Do firms with busy directors on the compensation
that busy directors are detrimental to firm value. More- committee overpay CEOs?
over, a variety of tests suggest that board busyness is
Busy director on No busy directors on
positively related to firm value among young firms. compensation compensation
committee committee
6.2. Potential negative effects of busy directors
CEO $4,829,358 $5,551,472
compensation
We have demonstrated that busy directors are more
(mean)
experienced, qualified, committed, and connected on the CEO $ 940,486 $ 859,053
various dimensions we can observe. Consistent with these compensation
attributes, performance immediately following the IPO is (median)
increasing in board busyness. We have argued that our
results are due to enhanced advising by busy directors.
However, prior literature on mature firms has focused on firms with busy boards are less likely to experience the
the negative effects of busy directors due to their lax negative outcome (e.g., less likely to delist for poor
monitoring. While it is not possible to completely differenti- performance, less likely to be sued, etc.). However, none
ate between the effects of advising versus monitoring, here of the differences are significant at conventional levels.
we examine a series of events that are arguably most likely to We note that our results are consistent with some of the
be associated with lax monitoring. findings of Ferris, Jagannathan and Pritchard (2003), who
Table 11 considers the relation between board busy- similarly find no relation between multiple directorships
ness and negative outcomes which may result from poor and securities fraud litigation within a sample of mature
monitoring. Panel A examines whether IPO firms with firms. Our results on CEO pay contrast with those of Core,
busy boards are more likely to delist for poor performance Holthausen and Larcker (1999) who find that CEOs of
or are more likely to conduct value-decreasing acquisi- mature firms with busy directors are paid excessively.
tions. Panel B investigates whether IPO firms with busy
boards are more likely to be sued in a class action lawsuit 6.3. Do firms compensate for busy directors by increasing
or to restate earnings. Panel C looks at whether IPO firms board size?
with busy boards are more likely to overpay their CEOs.
We find no evidence, on any of these dimensions, that While busy directors may provide a variety of advan-
busy boards are detrimental. In fact, in almost every case, tages to firms, for example, superior advising capabilities,
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82 79

Table 12
Do firms adjust board size to compensate for busy directors?
The sample consists of 5,747 directors across 1,099 venture-backed IPOs between 1996 and 2008. Panel A shows the average number of directors and
number of independent directors, respectively, for busy and non-busy boards at the IPO. t-Statistics for differences between sizes of busy and non-busy
boards are shown in the far right column of Panel A. ***, **, And * denote significance at the 1%, 5%, and 10% levels, respectively. Panel B shows the average
number of ‘‘super-busy’’ directors for each of 1,099 firms at the time of the IPO. To define super-busy directors, we place all independent directors into
quintiles based on the number of boards on which they serve; directors in the top quintile are defined as super-busy. For each category of number of
super-busy directors, the far-right-hand columns of Panel B show the average number of directors on the board and the average number of independent
directors on the board. The symbols ***, **, and * denote significance of the difference between zero super-busy directors and at least Five super-busy
directors at the 1%, 5%, and 10% levels, respectively.

Panel A: Average board size by busyness at IPO

Busy boards Non-busy boards t-Statistic for

difference

Board size 6.7 6.9 1.53

# independent directors 5.1 5.3 1.86*

Panel B: Board size and super-busy directors at IPO

# Super-busy directors per firm Number of firms Average # Average # indp’t

of directors directors

0 277 6.2 4.6

1 367 6.6 4.9
2 252 7.0 5.5
3 133 7.7 6.1
4 49 8.0 6.5
Z5 21 8.6*** 7.3***

a wide network of connections, and valuable experience,
they also come with the obvious cost of having less time
to spend with the firm. One way that firms might choose
to both obtain the advantages of busy directors, but to
also compensate for their shortcomings, would be to hire
additional directors, that is, to increase board size.
Table 12 examines whether firms make such adjustments.
We conduct two sets of tests. Panel A shows a simple
comparison of board size in firms with and without busy
boards. The results provide no evidence that busy boards
are significantly larger.
The absence of a positive relation between board
busyness and board size is consistent with our lack of
any evidence (throughout the paper) that busy directors
are inadequate monitors in these newly public firms. If
lower agency costs in these firms (resulting from the
higher average ownership of management) reduce mon-
itoring demands, then the conventionally defined busy
director, i.e., a director serving on three or more boards,
may have sufficient time to adequately monitor the firm.
Following this logic, we consider the possibility that only
‘‘extremely busy’’ directors are too busy to adequately
monitor newly public firms, and thus, firms would com-
pensate for the presence of such directors by increasing
board size. Specifically, we classify all independent direc-
tors into quintiles based on the number of boards on
which each serves. Directors in the top quintile are
considered ‘‘super-busy.’’ We then count the number of
super-busy directors in each firm, and examine whether
firms with more super-busy directors have larger boards.
As shown in Panel B of Table 12, we find a monotonic
relation between board size and the number of super-
busy directors per firm. In sum, we do find evidence that
firms adjust the composition of the board to compensate
for the time constraints of extremely busy directors
serving on many other boards.
6.4. Are results robust to an alternate definition of
busyness?
Following the 2002 guidelines of the Council of Institu-
tional Investors, Corporate Governance Policies, we form an
alternative definition of director busyness for our sample of
IPO firms. Specifically, we classify retirees and venture
capitalists as busy only if they serve on at least six boards.
For all other directors, we continue to define a busy director
as one who serves on three or more boards. Using this
alternative specification, 16% of IPO firms have busy boards,
and 22% of directors are busy. Results (not shown) regarding
the qualifications, level of commitment, and effectiveness of
busy directors under this alternative specification are qua-
litatively similar to reported results.
6.5. Changes in corporate governance regulations
The implementation of Sarbanes-Oxley (SOX) during
our sample period affected many aspects of corporate
governance (see, e.g., Linck, Netter and Yang, 2009). We
conducted a variety of tests to ascertain the effects of SOX
on director busyness, both within our main sample of
newly public firms and within the broader sample of all
RiskMetrics firms. Notably, we find no significant time
trend in the percentage of busy directors in either sample.
Re-estimating all empirical tests in both the pre-SOX and
post-SOX periods reveals no significant changes in the
effects of SOX.
80 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82

Table A1
Variable definitions.

Variable Definition

# Boards director serves on Number of public and private company boards a director sits on.
# Months since IPO Number of months since firm completed initial public offering.
# Independent directors Number of independent directors.
# Independent directors over 60 Number of independent directors who are over 60 years of age.
# Independent directors with Number of independent directors who hold MBAs from Harvard or Stanford.
Harvard or Stanford MBA
# Prior IPOs Number of IPOs, prior to the one in question, during our sample period (1996–2008),
in which the director has served as a board member.
% Board independent Fraction of board consisting of independent directors.
% Busy directors Fraction of independent directors who are busy.
% Firms conducting acquisition within 3 years Fraction of firms that conduct an acquisition within three years of IPO.
% Firms delisting within 3 years Fraction of firms that delist within three years of IPO.
% Firms with busy board Fraction of firms with busy boards.
% VC-affiliated independent directors Fraction of independent directors who are venture capitalists.
Ten years post-IPO Indicator equal to one for firms at ten years post-IPO.
Affiliation with top 25 VC Indicator equal to one if firm has director from top 25 VC firm.
Average acquisition announcement Average cumulative abnormal return, measured from one day before to one
CAR ( 1,1) day after acquisition announcement.
Board independence Percent of directors who are independent (non-employees).
Board size Number of directors serving on board.
Busy director Indicator equal to one if a director serves on three or more boards, including
IPO firm’s board.
Busy board Indicator equal to one if at least half the directors are busy.
Busy boardt-3 Indicator equal to one if the firm had a busy board three years prior.
CEO compensation Total CEO compensation of CEOs, including cash and equity.
Depreciation/sales Depreciation expenditures scaled by sales.
Director age Natural log of director age, as of the closing of the IPO.
Director affiliated with top 25 VC Indicator equal to one if director affiliated with a top 25 VC.
Director has Harvard or Stanford MBA Indicator equal to one if a director has an MBA from Stanford (Harvard) business
school.
Director is busy Indicator equal to one if director serves on at least three boards.
Director is chairman Indicator variable equal to one if a director is the chairman of the board of
firm at the IPO.
Director is VC Indicator variable equal to one if director associated with VC firm.
Director on audit Indicator variable equal to one if a director is a member of audit (compensation)
(compensation) committee committee of the IPO firm.
Director ownership Average % share ownership per independent director.
Director tenure with IPO firm Natural log of number of years director has served on the board of the firm going
public.
Firm age Number of years before IPO that firm was first founded (or first incorporated, when
founding date not given).
Firm sued Fraction of firms sued within three years of IPO.
Firm sued, case not dismissed Fraction of firms sued within three years of IPO, and case not dismissed.
Firm restates earnings Fraction of firms that restate earnings within three years of IPO.
Female independent director Indicator equal to one for independent directors who are female.
Forbes 500 Indicator equal to one for Forbes 500 firms, as classified in 2002.
Independent director ownership Percent of shares owned by independent directors.
Initial busy board (at IPO) Indicator equal to one for firms with busy board at IPO.
Initial return Difference between closing price and offer price, scaled by offer price.
Intangible assets/total assets Intangible assets scaled by total assets, measured at fiscal year-end.
IPOs with a director from a top 25 VC Fraction of IPO firms with director(s) affiliated with a top 25 VC.
Ln(firm age) Natural log of firm age.
Ln(# directorships of CEO) Natural log of the number of outside directorships of CEO.
Ln(board size) Natural log of the number of directors on the board.
Ln(CEO tenure) Natural log of number of years CEO has worked for the firm.
Ln(total assets) Natural log of total assets.
M/B (M/Bt-n) Market-to-book ratio, measured at the fiscal year-end, t (market-to-book ratio,
measured at year t-n).
Proceeds raised Millions of dollars raised in initial public offering.
R&D/sales Research & development expenditures scaled by sales.
ROS (ROSt-n) Return on sales, measured as net income/sales at the fiscal year-end, t (return on sales,
measured at year t-n).
Sales growth [Lag(sales growth)] Change in sales from the prior year to the present year [lag of the same variable].
Silicon Valley Indicator equal to one if IPO firm located within 10 km of the center of Silicon Valley.
Top 25 VC Indicator variable equal to one for directors affiliated with a top 25 VC firm (defined as
those with the largest number of IPOs during our sample period).
Underwriter rank Rank of underwriter measured using the rankings provided by Carter and Manaster
(1990), as updated by Carter, Dark and Singh (1998) and Loughran and Ritter (2004).
VC director Indicator variable equal to one if a director is affiliated with a venture capital firm.
 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82
7. Conclusion
While considerable literature has focused on the cor-
porate governance of mature firms, we know relatively
little about corporate governance in firms at earlier stages
of their lifecycle. Newly public firms’ lack of experience
with public markets and limited networks likely cause
them to place different demands on their boards, com-
pared to more mature firms. We posit that newly public
firms are likely to have higher demands for advising, such
as advice on how to navigate public markets, deal with
the media, interact with analysts, etc. At the same time,
the relatively high ownership of managers may cause
agency conflicts to be lower, thus causing the demand for
advising to exceed that for monitoring.
We posit that, due to this relatively high demand for
advising over monitoring services, busy directors may be
especially beneficial to young firms. Busy directors, almost by
definition, tend to be better connected and more experienced
than their non-busy counterparts, and such characteristics
will be of obvious value to firms with relatively few connec-
tions and little experience. Consistent with this intuition, we
find that busy boards are common among IPO firms: 49% of
IPO firms have busy boards. Moreover, we find that firm
value is increasing in board busyness for recent IPO firms.
As these IPO firms mature, we expect their demand for
advising to decrease and their demand for monitoring to
increase. Consistent with this conjecture, we find that as
firms mature, the frequency of busy boards declines.
Moreover, we find that the positive relation between
board busyness and firm performance is attenuated five
and ten years following the offering.
Analysis of a broader sample of S&P 1500 firms provides
additional support for the conjecture that the benefits of busy
boards are lower among more established firms. Specifically,
the relation between M/B and board busyness is significantly
lower among Forbes 500 firms than among other S&P 1500
firms. Notably, the relation between M/B and board busyness
is significantly positive among the broader sample of S&P
1500 firms, a finding that is significant in light of recent calls
to put limits on the number of directorships that board
members can hold.
Our paper highlights the extent to which different types
of firms place different demands on their boards; optimal
corporate governance is not identical across all firms. We
conclude that calls to limit multiple directorships could
impose costs on many firms, making it difficult for them to
find suitable board candidates. In the case of IPO firms, such
limits would potentially force busy venture capitalist direc-
tors to leave firms too early in the maturing process.
Restrictions on the ability of directors to serve on multiple
boards could pose negative externalities on firms’ governance
structures, in particular those of younger, less established
firms. Broad-brush recommendations to reduce directorships
should not be pursued.
Appendix. Variable definitions
The sample consists of 1,099 venture-backed U.S. IPOs
between 1996 and 2008. Data on IPOs are from Thomso-
nOneBanker by Securities Data Corporation. Data on
81
directors are from prospectuses filed with Securities and
Exchange Commission, data on venture capital firms are
from Pratt’s Guide, data on earnings restatements are
from the General Accounting Office, data on lawsuits are
from Stanford Securities Class Action Clearing House,
the stock price data are from the Center for Research
in Security Prices (CRSP), and financial data are from
Compustat. Variable definitions are provided in Table A1.
References
Aggarwal, R., 2000. Stabilization activities by underwriters after initial
public offerings. Journal of Finance 55, 1075–1103.
Angrist, J.D., Pischke, J.-S., 2009. Mostly Harmless Econometrics:
An Empiricist’s Companion. Princeton University Press, Princeton, NJ.
Baker, M., Gompers, P., 2003. The determinants of board structure at the
initial public offering. Journal of Law and Economics 46, 569–598.
Barry, C., Muscarella, C., Peavy, J., Vetsuypens, M., 1990. The role of
venture capital in the creation of public companies: evidence from
the going–public process. Journal of Financial Economics 27,
447–472.
Bebchuk, L., Cohen, A., 2005. The costs of entrenched boards. Journal of
Financial Economics 78, 409–433.
Boone, A., Field, L., Karpoff, J., Raheja, C., 2007. The determinants of
corporate board size and composition: an empirical analysis. Journal
of Financial Economics 85, 65–101.
Brickley, J., Linck, J., Coles, J., 1999. What happens to CEOs after they
retire? new evidence on career concerns, horizon problems, and CEO
incentives. Journal of Financial Economics 52, 341–377.
Bugeja, M., Rosa, R.D.S., Lee, A., 2009. The impact of director reputation
and performance on the turnover and board seats of target firm
directors. Journal of Business Finance & Accounting 36, 185–209.
Carhart, M., 1997. On persistence in mutual fund performance. Journal of
Finance 52, 57–82.
Carpenter, M., Westphal, J., 2001. The strategic context of external
network ties: examining the impact of director appointments on
board involvement in strategic decision making. Academy of Man-
agement Journal 4, 639–660.
Carter, R., Manaster, S., 1990. Initial public offering and underwriter
reputation. Journal of Finance 45, 1045–1067.
Carter, R., Dark, F., Singh, A., 1998. Underwriter reputation, initial
returns, and the long-run performance of IPO stocks. Journal of
Finance 53, 285–311.
Cashman, G., Gillan, S., Jun, C., 2012. Going overboard? on busy directors
and firm value. Journal of Banking and Finance 36, 3248–3259.
Celikyurt, U., Sevilir, M., Shivdasani, A., 2010. Going public to acquire? the
acquisition motive in IPOs. Journal of Financial Economics 96, 345–363.
Chen, H., Gompers, P., Kovner, A., Lerner, L., 2010. Buy local? the geography
of venture capital. Journal of Urban Economics 67, 90–102.
Cohen, L., Frazzini, A., Malloy, C., 2008. The small world of investing:
Board connections and mutual fund returns. Journal of Political
Economy 116, 951–979.
Coles, J., Daniel, N., Naveen, L., 2008. Boards: does one size fit all? Journal
of Financial Economics 87, 329–356.
Coles, J., Daniel, N., Naveen, L., 2012. Board advising. Unpublished
working paper. Arizona State University, Drexel University, and
Temple University.
Coles, J., Hoi, C., 2003. New evidence on the market for directors: board
membership and Pennsylvania Senate Bill 1310. Journal of Finance
58, 197–230.
Coles, J., Lemmon, M., Meschke, F., 2012. Structural models and endogeneity
in corporate finance: the link between managerial ownership and
corporate performance. Journal of Financial Economics 103, 149–168.
Core, J., Holthausen, R., Larcker, D., 1999. Corporate governance, chief
executive officer compensation, and firm performance. Journal of
Financial Economics 51, 371–406.
Demsetz, H., Lehn, K., 1985. The structure of corporate ownership: causes
and consequences. Journal of Political Economy 93, 1155–1177.
Denis, D., Sarin, A., 1999. Ownership and board structure in publicly
traded corporations. Journal of Financial Economics 52, 187–223.
Easterbrook, F., Fischel, D., 1991. The Economic Structure of Corporate
Law. Harvard University Press, Cambridge, MA.
Fama, E., French, K., 1993. Common risk factors in the returns on stocks
and bonds. Journal of Financial Economics 33, 3–56.
Fama, E., Jensen, M., 1983. The separation of ownership and control.
Journal of Law and Economics 26, 301–325.
82 L. Field et al. / Journal of Financial Economics 109 (2013) 63–82
Ferris, S., Jagannathan, M., Pritchard, A., 2003. Too busy to mind the
business? monitoring by directors with multiple board appoint-
ments. Journal of Finance 58, 1087–1111.
Fich, E., Shivdasani, A., 2006. Are busy boards effective monitors? Journal
of Finance 61, 689–724.
Fich, E., Shivasani, A., 2007. Financial fraud, director reputation, and
shareholder wealth. Journal of Financial Economics 86, 306–336.
Field, L., Karpoff, J., 2002. Takeover defenses of IPO firms. Journal of
Finance 57, 1857–1890.
Gilson, S., 1989. Management turnover and financial distress. Journal of
Financial Economics 25, 241–262.
Gilson, S., 1990. Bankruptcy, boards, banks, and blockholders: evidence
on changes in corporate ownership and control when firms default.
Journal of Financial Economics 27, 355–387.
Hansen, L.P., 1982. Large sample properties of generalized method of
moments estimators. Econometrica 50, 1029–1054.
Hellmann, T., Puri, M., 2002. Venture capital and the professionalization of
start-up firms: empirical evidence. Journal of Finance 57, 169–197.
Hermalin, B., Weisbach, M., 2003. Boards of directors as an endogenously
determined institution: a survey of the economic literature. Eco-
nomic Policy Review 9, 39–68.
Hochberg, Y., Ljungqvist, A., Lu, Y., 2007. Whom you know matters:
venture capital networks and investment performance. Journal of
Finance 62, 251–301.
Ishii, J., Xuan, Y., 2010. Acquirer-target social ties and merger outcomes.
Unpublished working paper. Stanford University and Harvard
University.
Kaplan, S., Reishus, D., 1990. Outside directorships and corporate
performance. Journal of Financial Economics 27, 389–410.
Kennedy, P., 2008. A Guide to Econometrics. Wiley-Blackwell, Boston,
MA.
Krigman, L., Shaw, W., Womack, K., 2001. Why do firms switch under-
writers? Journal of Financial Economics 60, 245–284.
Larcker, D., So, E., Wang, C., 2011. Boardroom centrality and firm
performance. Unpublished working paper, Stanford University,
Massachusetts Institute of Technology and Harvard University.
Lerner, J., 1994. Venture capitalists and the decision to go public. Journal
of Financial Economics 35, 293–316.
Linck, J., Netter, J., Yang, T., 2008. The determinants of board structure.
Journal of Financial Economics 87, 308–328.
Linck, J., Netter, J., Yang, T., 2009. Effects and unintended consequences
of the Sarbanes-Oxley Act on corporate boards. Review of Financial
Studies 22, 3287–3328.
Loughran, T., Ritter, J., 2004. Why has IPO underpricing changed over
time? Financial Management 33, 5–37.
Lyon, J., Barber, B., Tsai, C., 1999. Improved methods for tests of long–run
abnormal stock returns. Journal of Finance 54, 165–201.
Michaely, R., Womack, K., 1999. Conflict of interest and the credibility of
underwriter analyst recommendations. Review of Financial Studies
12, 653–686.
Nahata, R., 2008. Venture capital reputation and investment perfor-
mance. Journal of Financial Economics 90, 127–151.
Perry, T., Peyer, U., 2005. Board seat accumulation by executives: a
shareholder’s perspective. Journal of Finance 60, 2083–2123.
Pratt’s Guides to Venture Capital Sources, various editions, 1984–2002.
Venture Economics, Inc., Wellesley Hills, MA.
Pratt’s Guides to Private Equity Sources, various editions, 2003–2008.
Thomson Venture Economics, Inc., Newark, NJ; New York, NY.
Roberts, M., Whited, T. Endogeneity in corporate finance. In: Constanti-
nides, G., Harris, M., Stulz, R. (Eds.), Handbook of the Economics of
Finance, vol. 2. North Holland, Amsterdam, forthcoming.
Sørensen, M., 2007. How smart is smart money? a two–sided matching
model of venture capital. Journal of Finance 62, 2725–2762.
Stuart, T., Yim, S., 2010. Board interlocks and the propensity to be
targeted in private equity transactions. Journal of Financial Econom-
ics 97, 174–189.
Wooldridge, J., 2010. Econometric Analysis of Cross Section and Panel
Data, Second ed The MIT Press, Cambridge, MA.