Multiple Directorships and Leverage: Evidence from Taiwan

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Title:	Multiple Directorships and Leverage: Evidence from Taiwan
Authors:	Yang, Shuching Chou Hui-Lan
Contributors:	National Yunlin University of Science & Technology, Taiwan, 123, Section 3, University Road,Touliu, Yunlin, Taiwan 640
Keywords:	Multiple directorship;Leverage;Long-term debt;Agency problem
Date:	2010
Issue Date:	2013-07-26 03:38:13 (UTC+0)
Publisher:	National Yunlin University of Science & Technology, Taiwan, 123, Section 3, University Road,Touliu, Yunlin, Taiwan 640
Abstract:	This study examines the effects of multiple directorships on company’s debt financing. Prior literatures have investigated the influence of multiple directorships on firm performance, yet few studies have concerned the relation between a company’s loan capacity and director’s interlocking. By utilizing 8817 observations of Taiwan listed companies and three stage least squares (3SLS) to control endogeneity, the results show a significantly positive relation between multiple directorships and long-term debt ratio. However, the relation between multiple directorships and long-term debt ratio turns to be negative when companies have busy boards over three outside directorships. These findings agree to resource-based theory and imply that multiple directorships could be a resource to expand loan capacity. However, too much concurrent posting by directors on others firms may result in agency problem in context of director’s incentives to reduce supervision by smaller number of outside creditors.
Relation:	2010中部學術財金研討會論文發表
Appears in Collections:	[Department of Finance] Proceedings

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